By Ashford W. Meikle, Staff Reporter
President of Cable and Wireless Jamaica Limited (C&WJ), Jacqueline Holding (centre) shares a joke with former president of C&WJ, Gary Barrow (right), and senior vice-president of residential services, Evan Garricks (left), at its annual general meeting last October. - File
NINE MONTHS ago the financial performance looked grim for the country's only full service telecommunications provider, Cable and Wireless, Jamaica Limited (C&WJ).
In an early morning press conference an unusual occurrence in corporate Jamaica the company's top brass dropped a bombshell to a stunned audience. The company owing to a write-off of its outdated TDMA cellular operating platform posted a staggering $5.3 billion loss. Though the loss was a non-cash item, which did not affect headline profits, it was hardly good news for shareholders dividends were not paid.
Though it may be several months before the final results for 2004 are published, one thing is certain is that the company will record an improved performance, as indicated by its interim nine months' report to December 31, 2004.
Revenues are down not
surprising, given the fierce
competition in the telecommunications but demonstrating that it is a company for all seasons, the indomitable C&WJ managed to post an increase in its net profit, albeit a small one.
MARGINAL IMPROVEMENT
Total revenues declined by five per cent to $16.7 billion compared to the $17.6 billion earned in the corresponding period. And while cost of sales declined by a similar five per cent ($5.5 billion), gross profits declined by nine per cent, to $11.1 billion. As a result of tight cost controls, C&WJ was able to record a marginal improvement in its operating profit. With operating expenses falling to $8 billion a 13.5 per cent drop C&WJ was able to post a slim three per cent increase in its operating profit, to just over $3 billion.
After accounting for taxation, net profit attributable to shareholders increased to $1.6 billion, a five per cent increase.
DECEMBER QUARTER
However, in crunching the numbers, the December quarter was not the best performance for the company. In fact, compared to the corresponding period for the previous year, there was an overall decline in revenues and headline profits. Without detailing the line items, it is enough to point out that revenues fell by five per cent, to $5.6 billion while net profit saw a decline of almost nine per cent, to $470.5 million.
Segmental analyses of the company's product lines indicate that its best performance continue to come from the mobile division and its other income which come from "product and services such as data and Internet to equipment sales ... directory services and ... the high growth Broadband segment." At the same time, revenue from its fixed line segment dipped by eight per cent, to approximately $10
billion; operating profit was down by 10 per cent.
The declining performance of the fixed line segment gives credence to a recent statement by the vice-chairman of Cable and Wireless, plc, Lord Robertson. In an exclusive interview with Sunday Business, he noted, "we do a lot of uneconomic things like placing fixed line in the rural communities and we do not make money on that. We also provide telephone boxes for the public which isn't designed to be a revenue earner. That is part of the package of being a national telecoms provider."
Income from the mobile segment declined by two per cent , to $4.3 billion while the other income segment was up by 69 per cent, to $2.1 billion. The latter suggests that C&WJ will increasingly have to look to expanding its other services to drive income. In fact, it is expected that the company will see further growth in this category, especially after it fully rolls out Max, its new Internet wireless solution, in Jamaica.
