“As we head into 2017, we are laser focused on improving the results at CWC . . . ” – John Fries, chief executive officer, Liberty Global plc, February 15
NOBODY TELLS ME anything. I did not know, for example, that Niall Sheehy was no longer the managing director (MD) of Cable & Wireless Communications’ Barbados operations. Or that Jenson Sylvester, who only a few weeks ago held a meet-and-mingle with clients at the trendy Buzo Restaurant at Hastings as the new veep of C&W Business here, had suddenly found himself vaulted into the top spot as interim MD of CWC Barbados pending a search for a new chief executive officer.
So, being thus totally uninformed – quite unlike my colleagues who, it emerged, seemed to know all about such things – I went to the “media roundtable” with CWC’s Caribbean president Garry Sinclair at Flow’s headquarters here last week.
Sinclair did nothing to enlighten me about all this until half way through his own meet-and-mingle (without the “canapés and cocktails”), at the former Orange Mall complex. Instead, he opened with a major, unexpected salvo about the continuing “anachronistic” regulation of landlines here.
Eventually, one of the journalists asked whether he could confirm the departure of Sheehy, and he did. When I followed up, asking, basically, what had happened, Sinclair said only that the former managing director and the company’s views had “diverged on how to take the business forward”, and he had resigned. Later, as were were leaving, a press release with a terse confirmation was also handed out.
So I can’t tell you why Sheehy is no longer there, or for that matter, why the former head of C&W Business, Jaggernauth Dass isn’t still doing that job either, and I could mention a few others who appear to also have recently “moved on”.
But I can share with you a fuller portion of the Mike Fries quote carried at the top of this column, taken from his review of the 2016 performance of CWC, which is part of the LiLAC group within Liberty Global. He said: “With regards to LiLAC, our Latin American and Caribbean business, we closed the acquisition of Cable & Wireless (CWC) in May 2016. Despite some initial challenges, we believe in the prospects for this business as we exploit our organic growth potential and scale efficiencies across the region.”
And he added: “From an organisational perspective, we have changed CWC’s operating model and recently placed a number of key personnel in critical roles within the business, including the confirmation of John Reid as CEO. As we head into 2017, we are laser focused on improving the results at CWC and expect the LiLAC Group to deliver approximately US$1.5 billion of OCF (operating cash flow) for the full year.”
When executives reviewing their financial years talk about delivering cash flow, it usually means the entity is not making any money.
In fact, according to the company’s financial press release, the LiLAC Group recorded a net loss of US$227 million for the year ended December 31, 2016, as compared to net earnings $52 million for the prior year. If you want to read it yourself, go to www.libertyglobal.com.
The losses incurred by LiLAC were to some extent caused by CWC, although there is no separate breakdown for that in the report.
But the published results bear out Sinclair’s point that while CWC has seen growth in its mobile and B2B sides, it is losing ground in the landlines department. CWC measures its sales through revenue generating units (RGUs), so that if you have just a landline, you contribute one RGU to the pot, while if you have Internet, landline and mobile, then you are contributing three RGUs.
In the case of Barbados, the company said: “RGUs declined by 13 000 in total during the post-acquisition 2016 period, due to competitive intensity combined with customer experience challenges during our ongoing programme to upgrade customers from our legacy copper to nationwide fiber based network.”
Last year, Barbados fixed-line subscriptions fell compared to the same nine months of the previous financial year. Said Sinclair: “We live in a market where the dominant means of voice traffic is mobile, we have a vigorous mobile competitor, yet we are the only ones subject to any regulation, and the regulation is based on the fact that we have a market leading but small portion of the voice market through our fixed business.”
You will note that I am skimming over the ocean of telecom stats in this column. I am doing so because there is no point getting bogged down in all that minute detail right now. I am merely trying to understand why Sinclair, the president for CWC Caribbean would have sat down at his first “media roundtable” (at least the first one I went to with him) and, with no other top management from Barbados sitting next to him, except the communications director, launch into a call for fixed voice services, a.k.a. landlines, to be deregulated in Barbados.
And he did this without reading from any prepared statement, and when asked for details, said he didn’t have any right now but would get them over to us right away (I’m still waiting).
In the meantime, the Fair Trading Commission reported, in a review of the sector dated March 3, that there were 335 000 mobile subscribers (post- and pre-paid together) here in 2015, but that the total had remained at around 306 000 for the previous two years. It also noted that the number of landlines here totalled almost 150 000 in 2015, but this was an increase over the 135 000 from 2014, essentially a regaining of the ground lost between 2013-14.
So I do think there may be a case to be made for removing some of the regulations on landlines, but you have to come with a case. You know, a pro and con report, or a SWOT analysis, or something more than just to say, hey, this is costing us a lot of money and it is unfair to us.
There may also be an excellent case for retaining regulatory control over landlines, so I personally am open to a full discussion on this issue. The only thing I can come up with as to why this has suddenly become an issue, nine months after the takeover of CWC by a new entity, is to invite you to look at who owns it now.
