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Cable: $442m Debt Slash Top 'Priority'

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Franklyn Butler

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Cable Bahamas’ chief executive yesterday pledged that slashing the company’s $442m debt and “reinstating” shareholder dividends are among the top priorities in its new financial year.

Franklyn Butler, in an interview with Tribune Business, said the BISX-listed communications provider was “doing everything to prioritise” investor needs amid growing shareholder disquiet over heavy losses sustained as a result of its Aliv and Florida expansions.

The Cable Bahamas chief, though, argued it was “not uncommon to be out of sync with your shareholders” during such a growth phase especially given the emphasis most Bahamian investors place on receiving an annual dividend as the measure by which they judge a company’s performance.

Dividend payments have been suspended for several years to conserve capital for investing in the Bahamian mobile and Summit broadband roll-outs, and Mr Butler - while voicing hope that they might be resumed “in fairly short order” - said he was unable “to commit to a timeline” for doing so.

He confirmed that Cable Bahamas is examining the best method to “deleverage the balance sheet”, which at end-March 2019 was carrying $286.306m in preference shares and $155.861m in bank debt.

Much of this was incurred to finance the provider’s rapid, capital intensive expansion over the past three years, but it had left Cable Bahamas with net equity of just over $30m at end-March 2019 and a “current” solvency deficiency of just over $35m.

However, Mr Butler yesterday said Cable Bahamas will likely have “some very positive results to release” to its shareholders for the financial year just-ended on June 30 when the next annual general meeting (AGM).

He added that the company was on track with executing the plan outlined at the previous AGM, and revealed that Cable Bahamas was likely to invest between $10m-$15m on network infrastructure upgrades along during its 2020 financial year.

Mr Butler said the company’s core cable TV business is coming under increasing pressure from the likes of Netflix and android boxes, but added that it was not losing subscribers to the Bahamas Telecommunications Company’s (BTC) Flow TV product.

Still, recognising growing concerns from some shareholders, he told Tribune Business that “how do we deleverage the business and reinstate the dividend” were key questions himself and other Cable Bahamas executives are working on to develop the best solution.

“I’m not making any commitments at this stage of the game,” he said of the dividend. “We continue to have that as a priority and something we continue to work on. We have a plan, and we’re executing that plan.

“We’ll do all we can to update the shareholders as and when it’s appropriate on when we will reinstate the dividend. If you look at revenues, we’ve more than doubled the business in the last three years, so we expect that at some point cash flows will continue to improve and we will be able to get to the dividend in fairly short order, but I can’t commit to any timeline.”

Cable Bahamas has suffered two years of $50m-plus net comprehensive losses prior to 2019 due to the start-up financing needs of Aliv and its $100m US acquisitions, which resulted in three Florida-based companies being merged into the surviving Summit Broadband entity.

Many Cable Bahamas shareholders, typically focused on regular dividend payments as opposed to medium and long-term value that can be obtained if growth opportunities are properly executed, have become increasingly anxious over when these will resume and the company return to the consistent profitability of the past.

Several believe the BISX-listed communications provider has expanded too rapidly, biting off too much and taking on too much debt to finance its ambitions. However, Mr Butler said yesterday: “We are confident that the results moving forward will be better than they have been over the last three to four years. That was a journey.

“Unfortunately, shareholders in The Bahamas are very yield based, so when a company goes through this growth phase it is not uncommon to be out of sync with your shareholders. We’re doing everything to prioritise the needs of shareholders, and I’m confident we will execute on that as well over coming quarters.”

That and reducing Cable Bahamas’ debt will be “the focus” for its just-started 2020 financial year, as well as executing fully on Aliv’s growth potential and the opportunities to “deliver superior solutions” for Bahamian businesses on the fixed-line voice side.

“We’re executing well but there’s always opportunities for us to do more,” Mr Butler added. “We want to manage the decrease in TV subscribers, and give them more Internet and phone.... The core business continues to do well. In most instances we’re adding fixed-line voice subscribers, selling people more Internet capacity.

He said Cable Bahamas’ core TV business was the segment under most pressure, although not from BTC but Netflix and android boxes. Mr Butler indicated that he was not unduly concerned, describing the TV segment as a “fairly low margin business”, and said the company was looking at how it delivers TV and video content amid changing consumer tastes.

“We continue to upgrade our network and invest in areas of the business to make sure customers get the best in the market, and that we maintain leadership from a product development perspective,” the Cable chief told Tribune Business. “We will invest several million, well above $10-$15m I suspect, on network upgrades.”

He added that Summit Broadband presented multiple opportunities for short and medium-term growth in the US, while Cable Bahamas was also rewarding Bahamian residential customers for their loyalty and moving to increase its value proposition through the recent REV Trio promotion and launch of the $136,000 Cashback campaign.

Comments

Well_mudda_take_sic 1 month ago

I dumped my Cable Bahamas (CB) shares a long time ago at a handsome gain when I first caught whiff of the rumours that the investments in the Florida entities were nothing more than a bogus mechanism for borrowing the U.S. dollars P. Keeping needed to cash out his remaining equity interest in CB. The very costly Florida investments never had any real substance to them, other than enriching P. Keeping with the U.S. dollars he wanted for his remaining ownership interest in CB and similtaneously saddling CB's consolidated balance sheet with unsustainable debt. P. Keeping did however at the end of the day get his just desserts for this costly 'swindle' perpetuated on CB's other shareholders.

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MassExodus 1 month ago

Cable Bahamas is garbage. I won't even bother reading the article. At the first opportunity, I will be canceling my subscription, and getting a streaming service. They can't even keep basic channels like CNBC, CNN, or ESPN, on the air. They are all frequently down. GARBAGE!!!

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DDK 1 month ago

Looks like BTC and ALIV are killing each other!

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Well_mudda_take_sic 1 month ago

You don't know the half of it!

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hnhanna 1 month ago

Just pure bullshit he talking

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The_Oracle 4 weeks, 1 day ago

Never did use their service, Bootleggers then, Probably still are. Wonder what ever happened to the royalties "escrowed" against the day they would have to pay arrears for the use of HBO etc? No Habla anyway.

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