Strong C&WJ mobile growth
The report went on to state, “In the first half of the current fiscal year, our total number of network sites grew by 10 percent and our mobile networks carried 93 percent more data traffic, with Jamaica data traffic up 241 percent, BTC up 137 percent, Panama up 81 percent and Barbados 73 percent higher.”
In the Caribbean, the company said “we completed Phase 1 of our broadband expansion in Jamaica passing 800 homes in Portland with Phase 2 underway and set to pass an additional 7,300 homes taking our total homes passed to 276,000. We also began installation of a new backbone to upgrade core capacity to multiple 100Gbps links. In Trinidad, we passed an additional 4,800 homes with HFC, taking our total homes passed to 311,000 in Trinidad and we passed an additional 19,000 homes with FTTH in Barbados taking our coverage to over 100,000 homes passed. In the Bahamas, we have completed the design phase of our plans to pass 14,200 homes.”
Profit may not be far off at C&W
During the financial year Cable & Wireless added more than 107,000 mobile subscribers bringing the total to 820,500, according to the annual report of CW Communications (CWC) the parent company of Cable & Wireless. The cellular customer base has just about doubled since March 2012. At the end of December last year, C&W stated then that the cell customer base grew 18 percent, year to date to 813,000. C&W is said to have grown the cell customers by approximately 80,000 for the year to March 2013 and for the 12 months to March 2014 by 165,000.
Growth in cell customers increased mobile market share to 28 percent, based on customer who used their handset within the last three months according to the parent company, and probably more, based on all their customers with credit balances on handsets. The subscriber base of its main rival Digicel Jamaica, is said to hover around two million, but in all possibility, the number is under 2 million with the growth in C&W numbers over the last four years.
The increased subscriber base rocketed the mobile segment to incontrovertibly become the leading segment for the company. Mobile revenues earned $8.7 billion up 30 percent year on year; fixed voice remained flat at $6.5 billion, managed services at $3.6 billion was 25 percent higher than in 2014 and broadband & video at $2.7 billion compares to $2.3 billion or 17 percent increase year on year.
Some $4.5 billion of the exceptional charge relates directly to the flow acquisition. How much income will flow into C&W Jamaica from that operation is unknown at this time, but it should mean at least reduced cost for C&W from its existing operation. Revenues should continue to grow with the mobile customers added last year, generating income for the full year rather than part thereof, as occurred in the years of acquisition. The company should continue to add more customers in the current year as it goes after increased market share, particularly in the cellular market. The numbers suggest that the company could well return to profitability this year, based on the above savings and potential growth in revenues.
NCB dominates as market rises again
Tuesday’s activity on the Jamaica Stock Exchange, resulted in the prices of 9 stocks rising 7 declining as 27 securities changed hands, ending in 11,536,610 units trading, valued at $173,915,246, in all market segments.
National Commercial Bank that dominated trading on Monday with 27,173,167 units, was again the lead trade on Tuesday, with 7,970,682 shares valued at $163,393,196. The majority of shares traded was done by way of a cross executed by Sagicor Investments.
Main Market| The JSE Market Index gained 326.79 points to 77,528.25, the JSE All Jamaican Composite index rose 365.36 points to close at a 85,398.48 and the JSE combined index gained 256.46 points to close at 79,427.70.
IC bid-offer Indicator| At the end of trading, in the main and junior markets, the Investor’s Choice bid-offer indicator shows 8 stocks with bids higher than their last selling prices and 3 stocks with offers that were lower.
Gains| Stocks gaining with last traded prices, at the end of trading in the main market are, Jamaica Money Market Brokers trading 22,500 ordinary shares and put on 23 cents to $7, National Commercial Bank traded 7,970,682 shares to end with an increase of 30 cents to a 52 weeks’ high of $20.50. Sagicor Investments bought and sold 7,927,299 units of the amount traded, in two lots. Sagicor Group traded 14,298 shares while gaining 50 cents to $10.50. The Sagicor Real Estate Fund closed with 20,775 shares changing hands as the price gained 4 cents to $6.74, Scotia Group traded 31,119 units and put on 20 cents to $20.25 and Supreme Ventures put in 94,445 shares to end with an increase of 10 cents to $2.10.
Firm| The stocks in the main market to close without a change in the last traded prices are, Berger Paints finishing with 3,039 units changing hands at $1.56, Carreras in trading 98,550 shares closed at $41, Desnoes & Geddes closed with 30,000 shares trading at $4.90. Gleaner had 31,693 units trading at 81 cents, Jamaica Broilers closed with 123,928 units at $4, Jamaica Producers ended with 955 shares changing hands at $17. Proven Investments finished with 9,646 units traded at 21 US cents, Radio Jamaica ended with 4,657 units trading at $1.10 and Seprod finished had 14,348 shares changing hands at $11.90.
Declines| The last traded prices of stocks with losses at the end of trading in the main market are, Cable & Wireless ending with 2,013,234 units trading, losing 10 cents to 40 cents as investors reacted negatively to news that the company has to pay Digicel $1.5 billion for interconnection charges. Grace Kennedy had transactions in 9,900 shares to close lower by 10 cents at $61.90, Pan Jamaican Investment closed with 3,816 shares changing hands, 50 cents down at $52 and Scotia Investments in concluding trading in 854 shares lost 4 cents to $22.51.
Preference| Proven Investments 8% preference share closed with 247,500 units trading at $5.
Cable & Wireless email moves to Google
Cable & Wireless (C&WJ) has announced that they are going to use Google to host cwjamaica.com email and portal services in the future. According to a message to their subscribers the company says “this is a very exciting change, as it will enable us to provide you with latest email technology through Google’s dynamic suite of communication applications.”
The company said that they expect the Google migration to be implemented within the next two months and that email addresses will not change and that the change will not impact virtual domain customers nor will it impact any aspect of their Internet connection.
“In preparation for this move, a change to your email password may be required. Once the mail services have been transitioned to Google, your email password will need to be at least eight characters. This change is necessary to be compatible with Google’s security requirements, if your password is already least eight characters, you will not need to make any change. If not, you will need to change the password before July 8th, 2013 to avoid any possible downtime during the move to Google.” the release from the company said.
The move is likely to make it easier for the company’s customers to send and receive emails, especially when overseas. Presently, when overseas, email access is through the company’s webmail service which is not user friendly.
$2B slide in landline revenues sinks C&WJ
Cable & Wireless (C&WJ) revenues from landlines slipped $2 billion in the year ending March 2013 which helped push the company’s operating income into a loss before an exceptional charge of $2.75 billion relating mostly to reduction in staffing. A $670 million increase in mobile revenues could not prevent a slide of $1 billion in overall revenues which came in at $19.1 billion versus $20.4 billion in the previous year. In spite of the fall in revenue, a $1.5 billion drop in out payments made to other carriers offset by $500 million increase in other cost of sales resulted in gross profit slipping by just $340 million.
New rates | Last year June, when it announced radically new low rates, “the company indicated that it hoped the “game-changing” Talk EZ plan will double its market share from 18 per cent to 36 per cent within three years. It currently has 400,000 pre-paid customers and 50,000 subscribers, according to a Jamaica Observer report. The initial up take of the service last year suggested that they were on target to achieving that target with 250,000 new subscribers by the end of December but by March this year the numbers melted down to a 16 percent net increase or just under 100,000.
More customers | For the September quarter, the company stated that the mobile customer base increased by 20% and that they attracted 100,000 customers within 100 days of launching the new plan. Extrapolating, they started off with 500,000 mobile customers which reached 600,000 by September. In March the company shifted the tax of 50 cents per minute on cell calls to customers which they had absorbed from July last year when it was 40 cents per minute. This shift seems to have resulted in the attrition in new customers. Our estimate is that C&W decision to absorb the cell tax, cost the company about $500 million, a cost that won’t be repeated this year.
Banking | The company is banking on the recent reduction in termination rate to hand it an advantage, as they retain more of the amount customers spend with them, as they talk more with the new rate for both local and overseas calls to other networks. Down the road they expect that number portability will also present them with another opportunity as mobile users will be freer to switch networks.
Going forward | “Now that we have the new, lower Mobile Termination Rate that will be almost 90 percent less than what it was a year ago, LIME is in a better position to increase subscriber numbers and grow revenues,” management said in an exclusive response to IC Insider.
What seems logical is that persons will be less concerned about what number they are calling once the various rates are close to each other. So the scenario where customers were ring fenced to calling within their network due to the high cost of calling other network will no longer exists, allowing for freer calling and quite likely more time spent talking.
It will also reduce staffing and related costs and have a net benefit as a result of outsourcing the repairs and servicing to Ericsson. The first quarter of the last fiscal year had a lower margin on calls made to other networks as the termination rate came into effect in July 2012. In this year’s first quarter, C&WJ will enjoy a higher margin on cross network calls, helping improve the bottom line.
The savings to come from outsourcing of the field service support and from the absorption of the mobile call tax plus some growth in net cell revenues suggest that the company should be much closer to a profitable position, if not a profit, in the current year from normal operational expenses, assuming they maintain substantially existing business and continue to add mobile customers and get more talk time from existing ones.
Stock outlook | The stock last traded at 16 cents with a bid of 17 cents. The company has a negative net book value and it owes the parent company $28 billion which attracts interest at Treasury bill rates plus 1 percent. Working capital is negative with current assets being less than current liabilities.
C&WJ announces $2.99 prepaid rate
Following on the decision of the Office of Utilities Regulation to lower interconnection rates, from $5 to $1.10 effective July 1, Cable & Wireless (C&WJ), today announced a one rate of $2.99 per minute for all pre-paid calls to any domestic and select international numbers, effective midnight tonight.
The standard Talk EZ Prepaid customers will enjoy the $2.99 per minute rate – billed on a per second basis – for local calls as well as the USA, Canada and landlines in the U.K. The Talk EZ plan is the default option for all new LIME customers, existing subscribers may activate the plan by dialling *123*1# from any mobile phone.
Garfield Sinclair, CEO, Cable & Wireless Jamaica and Cayman revealed that the TALK EZ prepaid plan will also extend to calls made to subscribers on its rival competitors’ network, Digicel.
Coming down from $6.99 per minute – the new cross network rate of $2.99 represents a 60% reduction in the cost to call across networks for its mobile subscribers. Digicel customers currently pay up to $14.20 per minute to call the C&WJ network, the CEO said.
Sinclair further announced an offer for persons wishing to capitalize on the company’s new rate adjustment with an in-store deal that will see customers receiving a free Alcatel 296 handset and a free SIM card with the purchase of $1000 pre-paid mobile call credit. The two-day offer will be available at C&WJ stores island-wide from Friday, June 7 to Saturday, June 8.
C&WJ, which has emerged as the clear mobile value provider, announced a dramatic rate cut in on and off-network calls on June 14 last year, when the Office of Utility Regulation (OUR) issued its Interim Determination to reduce the Mobile Termination Rate from $9 to $5 per minute.
C&W: Less jobs, more capital spend
As the Cable & Wireless worldwide operations strive to adjust to changes in market forces and consumer demand, the group has been undergoing changes. Within the Caribbean region, stiff completion and tight economies as well as changes in the way people communicate have forced changes in their businesses in the region.
In an effort to improve results for the future, Cable & Wireless Caribbean incurred net exceptional items (excluding impairments) of US$50 million relating to redundancy and restructuring programmes in the Caribbean. The prior year charge of US$66 million was primarily in respect of restructuring activities in The Bahamas and Panama.
What about Jamaica? | Cable & Wireless Caribbean incurred US$26 million as an exceptional charge for cash payouts for redundancy and restructuring programmes. This charge was related to Jamaica and the eastern Caribbean but our calculations suggest that the bulk relates to Jamaica. Cable & Wireless Jamaica had indicated that it was making 300 persons redundant earlier this year and outsourcing the field force technician services to Erickson. The redundancy charge will wipe out any hope that may have existed for the Jamaican operation to return to profit in March 2013. In addition, the Jamaican operation would have picked up a large exchange rate adjustment charge on its foreign currency denominated debt. The stage should, however, be set for it to return to profitability in the 2013/14 year.
There was also exceptional impairment and depreciation charge of US$86 million in the year ended March 2013. This was mainly due to the difficult environment in the Eastern Caribbean. The prior year charge consisted of a non-cash impairment and accelerated depreciation charge of US$244 million primarily due to poor financial performance in Jamaica.
Capital spend continues | C&W continues to spend on capital improvements within the Caribbean basin which includes Panama. Capital investments continued to be in 4G/HSPA+ mobile data networks supporting smartphone sales in Panama, The Bahamas, Barbados, BVI, St Lucia and Cayman, selective pay TV investments, and improvements to the fixed broadband network. These fixed broadband investments include continuing the fibre roll-outs in the Caribbean and completing the Next Generation Network in The Bahamas. They have also pursued strategic investments in transmission capacity and cable systems to support both retail and carrier sales asa well as advancing billing and customer relationship management systems.
They have completed the second year of investment in the Bahamas having invested around US$100 million in capital projects during that period.