The Bahamas Telecommunications Company’s (BTC) controlling shareholder yesterday said it had little choice but to slash roaming rates that were 12 times’ higher than the Caribbean average, a move that caused a 9 per cent slump in its total mobile revenues.
Phil Bentley, Cable & Wireless Communications (CWC) chief executive, revealed that BTC was “performing as expected” even though its mobile roaming revenues dropped 40 per cent year-over-year for the three months to end-June 2015.
Unveiling CWC’s first quarter results for the year to end-March 31, 2016, Mr Bentley said the need to prepare for mobile competition, and cut BTC’s roaming and other rates, had resulted in flat cellular revenues for the group as a whole. He predicted that BTC would still face its first mobile competitor before the 2015 year-end, even though the Government and its advisers have yet to select the winning bidder.
We were flat on mobile overall
Mr Bentley told a conference call with London-based investment analysts yesterday.
We’ve got some good momentum in the Caribbean, where revenues are up 10 per cent, but we did know, and have flagged, that BTC in the Bahamas would be down simply because of the new international roaming agreements we’ve been putting in place with international carriers. So actually the Bahamas is performing as expected in that regard.
Roaming allows BTC customers to use their mobile phones abroad, while also permitting foreigners – tourists and those here on business – to do likewise in the Bahamas. For roaming to occur, BTC must have agreements in place with foreign mobile carriers whereby each allows the other’s customers to use their respective networks when abroad.
It has become an increasingly essential service for mobile carriers to offer, and Mr Bentley revealed yesterday just how uncompetitive BTC’s roaming rates were compared to the rest of the Caribbean – something unlikely to have endeared this nation to millions of tourists and visiting businessmen/investors.
Illustrating just why monopolies are bad for business and consumers, Mr Bentley, in response to an analyst’s question, said:
BTC’s roaming is about 12 times’ the price of the rest of the Caribbean.
Asked whether CWC was planning similar roaming rate cuts throughout the rest of its Caribbean business, Mr Bentley replied that prices were already “at a very much lower level” in this region.
We knew we’d have adjust the roaming rates down. There’s absolutely no chance of that being applied elsewhere.
BTC’s loss of lucrative mobile roaming revenues was one factor behind the company’s rush to further downsize its workforce by between 150-200 jobs – a move driven by the need to right-size the carrier’s cost structure prior to competition’s arrival.
Leon Williams, BTC’s chief executive, told a Bahamas Society of Engineers (BSE) luncheon earlier this year that foreign carriers were using the imminent arrival of a Bahamian mobile competitor as leverage to force roaming rate cuts. They were also pushing BTC to change its billing mechanism from ‘per minute’ to ‘per second’, which will also cut roaming revenues. Mr Williams said BTC anticipated losing between $25-$30 million in annual roaming revenues as a result of all this, producing a significant hit to both its top and bottom line. This, combined with the likelihood that a new mobile operator will quickly seize at least a 30 per cent market share, equivalent to $80-$90 million of BTC’s revenues, produced the downsizing haste as the company moves to align costs with a smaller top-line.
Mr Bentley, though, made no mention yesterday of the angst and uncertainty that BTC’s protracted workforce reduction exercise has caused among staff. He did, though, predict that BTC would face competition in its most lucrative market segment by year-end.
In terms of the Bahamas and the new entrant, we still don’t know who it’s going to be and when it’s going to be. We’re still forecasting later on in this calendar year, a new entrant will start to offer alternative service to BTC
The Government, though, has already missed the May deadline it had initially set to announce the preferred bidder for the Bahamas’ second cellular licence. With the winner likely to need five-six months at least to roll-out its network and start delivering services, there must be significant doubt that the new entrant – even if selected – will start competing with BTC before year-end.
Just two contenders, BISX-listed Cable Bahamas and Virgin Mobile (Bahamas), remain in the race following completion of the liberalisation process’s first round, which assessed bidders on their technical and financial competencies, and whether they could meet the conditions specified in the Government’s Request for Proposal (RFP) document.
Digicel, one of the leading contenders, withdrew from the process just before the Government’s Cellular Liberalisation Task Force announced the bidders who had made it through to the second round.
That involves a ‘spectrum auction’, where the contenders attempt to outbid each other in purchasing the spectrum frequencies necessary to operate a nationwide mobile network. While the spectrum auction has yet to take place, sources familiar with the situation told Tribune Business to “hold your breath”, implying that it might be imminent.
Source: Tribune 242