Jamaica a 'model' for C&W bosses

CABLE & WIRELESS PLC, the parent UK company behind the local phone monopoly, sees the new licence agreement with the Government as a "model" for the region.

The UK parent's finance director, Robert Lerwill, said last week that "Jamaica is almost a model for working with Government. To bring in the new regime - in terms of when competition comes to Jamaica and how it comes and how it will be regulated in a fair way - we are very pleased and I think the Government over there is."

He added: "I see no reason why in two or three or five years' time, we shouldn't be a stronger part because technology and communications are going to be a bigger part of GDP of almost any country in the world ... and therefore we want to be a part of that in Jamaica as much as anywhere else in the region."

Mr. Lerwill was speaking in a telephone interview a day after the UK-based telecoms giant announced a drop in Caribbean regional profits from £325 million to £302 million as part of its overall annual results for the year to the end of March 2000.

Telecoms analysts in London meeting to discuss the better-than-expected annual figures were informed that the "significant milestone was passage of a new Telecommunications Bill in Jamaica in March 2000 providing for the phased introduction of competition to all sectors of the Jamaican telecommunications market over the next three years and for immediate competition in mobile and international services."

Mr. Lerwill hinted that he may soon be playing a greater role in the running of Caribbean operations but declined to be more specific. "I do have a growing interest in the Caribbean and it's something that I'm going to become more familiar with."

The news comes as C&WJ prepares to present a new application for an increase in phone rates and a move on Friday that saw local boss Errald Miller indicate that the company would finance a plan, which will see outside contractors install house wiring and phones.

Mr. Lerwill added: "There is a recognition, even in wider circles like the FCC and WTO, that that agreement is a very fair one. It's a very fair way for an incumbent to work with a Government for the benefit of all the consumers as well as being fair on the people who have invested so much money. It's almost like a model and so with that sort of money going in there's a huge commitment from C&W Plc, because that sum (£80m) is not insignificant, to the region and Jamaica."

He added: "I see no reason, if we can get agreements like the one we have in Jamaica, elsewhere in the region that we shouldn't be committed....The whole purpose of having a good agreement is to make it a balanced agreement, for the benefit of C&W Jamaica shareholders, as well as employees (we are a major employer in the Caribbean), the Government - in terms of revenues from taxes on our profits and other royalty agreements - and for the people who want these new services. The great thing about telecommunications is that it's a growing pie."

C&W Plc's group revenue for the year ended 31 March 2000 rose 16 per cent to £9.2 billion, despite an 11 per cent (13 per cent in constant currency) fall in the revenue from Cable & Wireless HKT. After adjusting for the effects of acquisitions and disposals, and excluding Cable & Wireless HKT which has been sold, the underlying revenue of the group grew by 13 per cent. Its pre-tax profit before exceptional items and goodwill amortisation was £1.12 billion.

Exceptional items for the year totalled £3.1 billion.

"As part of its transformation, the Group undertook a thorough review of its assets in the first half of the year and, mainly as a result of rapid changes in technology, wrote down assets by £1.44 billion. Further asset write downs in the Caribbean and Panama brings the total for the year to £1.5 billion", according to the statement accompanying the results.

The £138 million write down in the Caribbean relates to the depreciation of equipment which it has to replace faster and faster with the influx of new technology, according to Mr. Lerwill.

Revenue from Cable & Wireless Regional increased by 8 per cent to £1.3 billion. Cable & Wireless Regional mainly comprises the Group's Caribbean and Panama operations but also includes operations in the Pacific, Indian and Atlantic Oceans. The Caribbean region, including Cable & Wireless Panama, increased its turnover by 6 per cent to £970 million.

"International revenues in the Caribbean and Panama were down on the previous year following an average 27 price reduction in the region in the second half. This stimulated a six per cent increase in outbound international minutes. The region has been working to align accounting rates with FCC benchmarks, reducing net settlement revenue," the company said.

Domestic revenues in the Caribbean and Panama rose in all areas due to an 8 per cent rise in lines in service along with new tariff structures and the installation of a pre-paid calling card platform in Jamaica. New retail stores and a new telemarketing centre in the Caribbean also played a part.

Mobile and Internet services produced strong revenue growth for the company in the region. High levels of investment and sales efforts increased the number of mobile customers in Panama by over 100 per cent. Mobile usage also grew in all other areas.

Internet growth came from both high-bandwidth direct connections and residential dial-up services. Growth will be further enhanced next year by entry into offshore e-commerce with Bermuda as a centre to serve the region.

The finance director said: "There has been a fall in profit, despite the revenue growth in the region overall. We have been investing heavily in all our business. In Jamaica we invested £80 million in capital expenditure, that is significantly more than we make in after tax profits in Jamaica, the same has happened on many other islands and obviously you have to recognise depreciation, the cost of upgrading networks to provide better services and provide new products in those areas."

When asked about the relatively low connectivity of the region Mr. Lerwill pointed to the substantial investments made by the company in recent times.

"Clearly connectivity locally is a significant issue. At the moment you must be at about 19 or 20 lines per 100, so a 50 per cent increase in two or three years' time is a pretty significant increase."

But he said : "In terms of the access from Jamaica to the world wide web, C&W is clearly the best company you could possibly have running your telephone system because our Global Internet Products (IP) network is the best in the world. It's been designed by the people that invented the Internet.

"You will have high speed, state of the art access into Kingston. Now, how that gets rolled out into small and medium sized enterprises (SME's), as well as bigger businesses and the people of Jamaica is something for the authorities in Jamaica and ideally we'd like to see everybody connected up. On the other hand it's not practical, you've got quite a difficult terrain in the island and clearly there are many people who want service who have not had the economic ability to pay a reasonable value for them".

He stressed that, "We can develop processes and systems for SME's equally well for somebody with a 15-or-20-man company in Jamaica as for someone in Tokyo, New York or Paris and I think the benefit that will come from us being able to bring those to Jamaica and the region will be very significant and will be for everyone's benefit."

Back to Business