Published: Wednesday May 28, 2008
Cable and Wireless Jamaica (C&WJ) has written off a major chunk of its mobile infrastructure but is expected within a matter of months to unveil investments for replacement technology.
Phil Green, the listed company's new CEO, says the write-down of mobile assests was the principal component of a $5.14 billion impairment of the accounts for financial year that ended on March 31.
"The write-off relates principally to all of our mobile infrastructure assets, and let me say that it now allows us to invest in a new mobile infrastructure, details of which will be announced shortly," said Green.
Overall, Cable and Wireless posted a loss of $4.2 billion, but that was after it utilised $3 billion in tax credits to bolster the bottom line.
The accumulated losses erased a near $6 billion of the telecom's capital base, which closed the year with shareholder equity of $14.7 billion, down from $20.3 billion.
Apart from the big asset write-down, C&WJ in July 2007 stopped taking new subscribers to Homefone, the system which people could pre-pay on their fixed-line telephones, similar to the pay-as-go feature on cellphones.
More recently, Green retired the 10/8 plan for cheap mobile rates to cauterise the bleeding of company revenues which fell to $23 billion from $24.7 billion.
But it is not just in the roll-back of predecessor Rodney Davis's policies that Green's appointment has signalled something new and different at C&WJ. His arrival coincided with plans by parent company C&W plc to decentralise its hold on its Caribbean subsidiaries.
Green, in March was annointed the telecom's top man in the Caribbean, as chairman of Cable and Wireless Caribbean (C&WC), the holding company for the regional firms.
C&WC has its own CEO, Richard Dodd, who was appointed in April and reports to Green.
Push new model
In his role as C&WC chairman, Green gets to push through the new business model for the region that was unveiled last Friday, aimed at weaning the Caribbean from the London-based parent.
The plan, over the next two years, is to establish in the Caribbean a single autonomous outfit with its own corporate structure.
Within this arrangement, Green says, the new Jamaican mobile network will sychronise with other regional operations.
To reach its goal as a top-five pan-Caribbean outfit, C&WC will have to grow business and its customer base, which Green tells Wednesday Business, numbers approximately two million clients across business segments.
Not only will the telecoms be adding new services, including wireless broadband and subscriber television, but it is looking to expand its regional footprint - possibly beyond the 16 Caribbean countries in which it has a presence. Mergers and acquisitions are likely to be on the horizon, but exactly where, Green declines to say.
"We will be looking for expansion opportunities on a case-by-case basis that truly complement the vision of a pan-Caribbean enterprise. That will be the preview of this new board," he said, referring to the new board of governors being created for C&WJ.
The transformation, which is to be backed by annual spend of US$140 million to US$180 million (J$10 billion to J$13 billion), will inte-grate networks through shared infrastructure, and the deployment of third-generation technology for mobile and Next Generation Network (NGN) for fixed-line customers in selected markets It is also expected to save on costs by amalgamating back-office operations and other business processes, including multiple customer information systems. The spending plan represents 12 per cent to 15 per cent of regional revenues, says Green, to be financed from internal cash flows.
Using his estimate as proxy, C&W Caribbean generates approximately US$1.2 billion of revenues, which amounts to about a third of group turnover of some US$6 billion (£3,152 million) in 2007-08.
The planned acquisitions would be additional investment. In fact, Green suggests that responsibility for big capital-investment decisions, under the new structure will reside in the Caribbean office headquartered in Barbados - architect of the seamless regional network.
Yet, even in this seamlessness, product development and service delivery will remain localised to avoid - as Green's second-in-command, Richard Dodd puts it - the creation of 'vanilla' services that ignores the peculiarities of each market.
The new board of governors for C&WC is to be fully constituted by November. Green says he is attempting to woo the top names in Caribbean business to be among the directors. Green and Dodd are also putting the finishing touches on a suite of 'full service' products they expect to roll out in coming months.
Jamaica last year was a big disappointment for C&W plc.
But London, in its forward-looking statement last week, says C&WJ is already showing signs of recovery, noting that six-month EBITDA in the second half of the financial year just ended was US$11 million higher than the first half, indicating, it said, "early progress" by the new management team.