C&WJ still in the red

Published: Wednesday August 20, 2008

Telecom provider Cable & Wireless Jamaica (C&WJ) posted a $27.4 million loss for its first quarter, but on the positive side its EBITDA earning increased 17 per cent.

On news of the results the sluggish stock advanced one cent to $0.73. It hit a high of $0.93 within the last 52 weeks. But yesterday patient investors received a net loss of $27.4m, slightly better than the same quarter last year at $0.16 per stock unit loss compared to $0.17 loss a year prior.

"We are working hard to improve our performance and are focused on delivering world-class customer experience, better value to our customers and increased value to our stockholders in the future. We expect to see the benefits in the coming quarters," said the C&WJ board in its release to shareholders.

C&WJ is building its new network, as a result its finance costs almost doubled to $420.7 million for the quarter, but it is also affected by non-cash depreciation and amortisation charges at $748 million. When these costs are discounted and arrive at EBITDA earning, C&WJ increased its earning by 17 per cent over the previous quarter last year at $1.14 billion.

C&W is sitting on over $11 billion due to its parent company which increased by some $4 billion since March this year. This increase helped to offset increases in loans of $3.9 billion, presumably to build its 3G service. It resulted in providing the company with cash and equivalents at $725.7 million. But even without the financing and investing activities, its net cash position has improved. It had $595.3 million in net cash from its operating activities, which is a complete reversal of the previous year when it had a cash shortfall of $580.8 million.

Additionally, revenue for the quarter declined four per cent from $5.9 billion in 2007 to $5.7 billion in 2008. This was due to a "16 per cent reduction in mobile revenue to $1.3 billion as a result of our change in strategy since the first quarter of 2007 to focus on gross margin which has improved by 11 percentage points," the board said. At the same time gross margin as a percentage of revenue increased from 60 per cent to 66 per cent. "This improvement was largely driven by improved mobile margins, changes in fixed line traffic mix and fixed line rate increases implemented in the second half of 2007/08," it said. Total operating expenses (excluding depreciation & amortisation) increased by three per cent over the quarter ended June 2007. Employee expenses increased by 23 per cent due to a reduction in pension credit compared with the same period last year. This increase was partially offset by a 3 per cent decline in administrative, marketing and selling expenses due to ICC Cricket World Cup sponsorship costs in the first quarter of 2007/08. "We have continued our focus on getting the basics right and implementing the 'CWJ Transformation Plan'. The highlights are:

. We signed a contract with Ericsson on July 2, 2008 for the first phase of our 3G wireless network;

. We launched new mobile calling plans to deliver better value to customers - "Superpak" and "Ultrapak" were launched on May 12, 2008;

. We were the first to launch a prepaid BlackBerry service in Jamaica on June 23, 2008;

. In June 2008, we deployed "Homefone Xpress" which delivers traditional fixed voice services over our mobile network - this makes voice services available to customers in remote areas and expedites service provisioning;

. We've improved our customer service metrics - repair time improved by 100 per cent and installation time by 57 per cent in the quarter; and

. We implemented a cost reduction programme to mitigate rising inflation and fuel costs - we expect to see the benefits in the second half of the year."


Source: Jamaica Observer
http://www.jamaicaobserver.com/magazines/Business/html/20080819T230000-0500_139255_OBS_C_WJ_STILL_IN_THE_RED_.asp