'Grey clouds' must lift to get Cable dividends


Franklyn Butler

* Parent agrees $70m Aliv loan


Tribune Business Editor


Cable Bahamas' top executive says dividend payments to ordinary shareholders will only resume after "some of the grey clouds" presently hovering over the Bahamian economy disappear.

Franklyn Butler, the BISX-listed communications provider's president, told Tribune Business in a recent interview that while a capital return will "not be too far away" once the COVID-19 pandemic fades the company had to be prudent in conserving resources amid ongoing uncertainty locally and internationally.

"Let's put it this way," he replied. "We are trying to manage everything around COVID-19. It has been an unprecedented time around the world and, from our perspective, we are trying to manage the risk that exists today globally and with telecommunications operators.

"There's just so much uncertainty, and when you think about every time they lockdown, it has a significant impact on our ability to grow sales and revenues.... As soon as we feel some of the grey clouds subside over The Bahamas and global economy as it relates to COVID-19 our shareholders should anticipate some relief is not too far away. We have to be prudent given where the local economy is."

Mr Butler spoke out just before the release of Cable Bahamas' annual report for the year to June 30, 2020, which revealed that it has agreed to provide a $70m loan to its Aliv mobile affiliate to restructure its finances and pay off existing debt.

"Cable Bahamas agreed to provide a secured $70m long-term loan facility that enables the Huawei network vendor leasing finance to be fully repaid early, repay outstanding deferred payments for using towers, transmission and other services to Cable Bahamas, and provide Aliv with cash reserves to fully fund the long-term business plan," the annual report said.

"Aliv’s increasing revenues and operating cash, and reduced capital investment requirements (net of insurance proceeds relating to Hurricane Dorian and sale of 21 tower sites to Cable Bahamas), led to Aliv’s lowest annual cash requirement of $4.2m in financial year 2020 funded from cash on hand.

"This was achieved with the support of Cable Bahamas who agreed to convert $22m of deferred payments due under its master service agreements with Aliv to a long-term secured debt facility in November 2020. Aliv has invested $52.9m over four years in acquiring and retaining its customer base through the provision of device subsidies, sales commissions and other costs."

Cable Bahamas holds a 47.25 percent equity interest in Aliv, together with Board and management control. Despite suffering a 15 percent year-over-year revenue decline during the three months to end-June 2020 due to the COVID-19 lockdown and associated restrictions, the mobile operator had managed to increase its network capacity by 35 percent to cope with the rise in remote working.

"During April, May and until June 12 in that initial lock-down phase, for 35 percent of the available days our Aliv agent sales were closed or only available to essential workers," Cable Bahamas' annual report said of its mobile affiliate.

"Revenues have now recovered to pre-COVID19 levels with the exception of roaming revenues, and the subscriber base has recovered. Despite all of the challenges in financial year 2020, Aliv grew its subscriber base by 12 percent to 169,882, increased its annual revenues by 30 percent to $76.8m, delivered positive EBITDA (earnings before interest, taxation, depreciation, and amortisation) and contributed $8M EBITDA to Cable Bahamas group results."

Total capital investment in rolling out Aliv's network over its four-year history, including the initial $62.5m licence fee, was pegged at $62.5m. "

"Aliv has subsequently invested $98m in network infrastructure rolling-out its 4.5G LTE and 3G network to 246 sites in all of the populated islands of The Bahamas, locating its mobile radio network equipment at 145 sites owned by Cable Bahamas and 79 sites owned by its competitor," the annual report added.

"Following the conclusion of the initial roll-out and system build, in financial year 2020 the $5.9m capital investment was focused on network capacity expansion and software enhancements and upgrades to develop new products."

Elsewhere, Mr Butler told shareholders that digital payments for Cable Bahamas, as a percentage of the total, had risen from 25 percent pre-pandemic to 75 percent as at end-June 2020.

"It became apparent to us that collection of payments would be a critical factor in our company’s continued strong financial performance," Cable Bahamas said. "Accordingly, we implemented a number of items including an increase in the options for bill payment, 'smart' payment collection campaigns driven by big data and analytics, a laser focus on daily payments, a new battery of metrics to provide insight into payment trends/risk and quickly pivot as required and strengthened our payment collections team.

"The impact of these efforts has increased payments received by customers by almost 33 percent (May through August 2020 versus March and April 2020). Consequently, our cash position is significantly improved."