By NEIL HARTNELL
Tribune Business Editor
CABLE Bahamas expects its growth strategy to start paying off for shareholders in less than a year's time, although it is "not fully satisfied yet" with the returns generated.
The BISX-listed communications provider told investors in its newly-released 2017 annual report that dividend payments, currently suspended, will resume during its 2019 financial year - which begins on July 1 next year.
Anthony Butler, Cable Bahamas' chairman and chief executive, yesterday told Tribune Business that some shareholders - especially retail investors - needed to be patient and understand that the company was investing for future gain, with key initiatives still in start-up mode.
Cable Bahamas' accounts for the 18 months to end-June 2017 revealed a $51.727 million net loss, driven by the 'red ink' associated with start-up and infrastructure build-out costs incurred by the Aliv mobile operator and its Florida investments.
The Florida operations lost $27.281 million, and Aliv $55.538 million, although Cable Bahamas' 48.25 per cent equity stake in the latter meant that itself - and its shareholders - incurred less than half that sum. Despite the $22.986 million loss suffered by Cable Bahamas' shareholders, Mr Butler reassured investors that the BISX-listed operator was on track with the execution of its 2014 growth strategy.
"We're doing fine," he told Tribune Business. "We are where we are. A lot of people don't understand the start-up [stage], and are looking for the returns. We stopped the dividend to conserve the cash, and are using and investing it wisely."
Cable Bahamas' losses over the past two financial years have seemingly unnerved some shareholders, with the dividend suspension exacerbating their concerns.
This was alluded to by Gary Kain, Cable Bahamas' chairman, in the annual report where he said that the company's share price had "experience some unusual fluctuation" over the past 18 months.
"This was in large part due to individual shareholders who suffered hurricane damages liquidating their position, and concerns over the entry of competition in the video sector [BTC]," Mr Kain suggested.
However, dividend suspensions are relatively routine for companies seeking to conserve capital for investment opportunities assessed as generating even greater future returns. With Aliv and the Florida operations now starting to emerge from start-up mode, the key now is for Cable Bahamas to execute and ensure increased revenue drops to the bottom line.
"We're executing the strategy we put in place in 2014, when the plan was to move into the mobile business," Mr Butler told Tribune Business. "We're happy with the execution of the plan. Florida is doing well, Cable Bahamas is continuing to generate earnings, and Aliv is growing market share."
Mr Kain said the BISX-listed communications provider has yet to achieve its investment return targets, but indicated it was making progress by announcing a timeline for the resumption of dividend payments.
"We are confident in our strategic direction, and our EBITDA growth continues to improve," he wrote in the annual report. "However, we are not yet fully satisfied by the returns that we are achieving on the substantial investments that the group has made in recent years.
"However, overall, the Board remains confident of the group's cash generation ability, and its forecast return on capital. This confidence will be reflected in our imminent review of the dividend policy, which was put on hold in July 2016 to preserve cash during initial stages of the mobile build-out and the fixed-line expansion programme in Florida. The company recently announced that these dividend payments will resume in financial year 2019."
Cable Bahamas, which has management and Board control at Aliv, said it was targeting a 30-35 per cent market share for the Bahamas' second mobile operator by year-end 2017.
Suggesting that it had obtained a 20 per cent share by end-June 2017, with 78,000 subscribers, Cable Bahamas said Aliv had produced almost $13 million in revenues during the seven months following its November 2016 launch.
"In less than eight months of operations, ALIV has completed an extremely successful finance capital fundraise, which resulted in $60 million of note payable debt financing for the company," Cable Bahamas said. "The offer was 100 per cent oversubscribed and fully financed.
"Therefore, coupled with the shareholders' investment of $135 million, and $35 million from vendor partner funding, Aliv has a total of $230 million in capital funding. This greatly contributes to our financial stability within the market.
"Our network and investments of $144 million is comprised of infrastructure and equipment for our Family Island roll-out, which offers the platform for the most advanced network and supporting systems in the country."
Emphasising Florida's earnings and diversification potential, Cable Bahamas said its wholly-owned Summit Broadband affiliate had added 5,483 residential customers over the 18 months to end-June 2017.
"Summit continued to see growth as revenue increased by 71 per cent to reach $84 million," Cable Bahamas said. "Over the last four years, total revenue grew by approximately $77 million or over 1,043 per cent. The largest contributing factors to this growth were revenues from residential subscribers (an increase of 33,656 subscribers in the four-year period).
"Residential revenue contributed approximately $53 million or 63 per cent of total revenue, and acquired 5,483 net new subscribers in 2017, representing a 17 per cent growth over the past 18 months. We expect to significantly grow over the next five years in residential and commercial revenue."
Cable Bahamas said its Hurricane Matthew recovery costs totalled $8 million, as a result of having to restore communications services to 60,000 homes and businesses, with more than 200,000 phone calls fielded.
"A significant part of the Grand Bahama outside plant network, which sustained the most damage, was rebuilt to the tune of nearly $6 million. An additional $2 million in cost was expensed during the financial year as a result of the storm not relating to the rebuild," the annual report disclosed.