LIME Jamaica loses J$1.3 billion in first quarter

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THE FNM SOLD BTC TO A FINANCIALLY TROUBLED COMPANY! LEADERSHIP YOU CAN TRUST!

by Alicia Roache

roachea@jamaicaobserver.com

Losses have continued to grow in the quarter ended December 2010 for telecoms company LIME Jamaica according to the latest published financial report. But bosses are pointing to plans which it is hoped would lead to a turnaround to profitability for the company.

For the period, net loss stood at $1.3 billion, 270 per cent greater than the $351 million loss in the comparative prior year’s quarter, but the launch of LIME’s mobile TV, and a national marketing campaign also took place in the quarter and necessitated increased spending, company executives noted. They also pointed to the planned expansion of LIME’s 3G penetration and other planned developments as prospects for a turnaround in profitability.

The negative results could not be mitigated by the mere 9.7 per cent increase in revenue for the quarter, but bosses cited progress in areas of the company’s operations including the launch of the hugely popular mobile TV in the quarter, a strong growth in mobile gross adds and a reduction in postpaid churn by 14 per cent as positive results. Other ways in which the company hopes to stop the haemorrhaging at the bottom line are an expansion in the broadband penetration and landline business and a possible offloading of its field operations to a global service provider.

“The talks are geared at examining opportunities to achieve cost savings and improved customer service,” LIME chairman Chris Dehring said in a statement to shareholders on the discussions with the provider.

However, the negative first quarter results followed a J$6.6 million increase in outpayments, 51 per cent more than that in the corresponding quarter of 2009; a $1.2 billion increase in other cost of sales, and a $220 million increase in total operating expenses.

The increase in total operating expenses, excluding depreciation and amortisation, was due to increased brand promotional activity and higher employee costs due to union pay agreements, Dehring said. There was a 28 per cent, or $237 million increase in employee expenses for the quarter and a 16.6 per cent increase in administrative, marketing and selling expenses, $1.9 billion more than in the prior year’s quarter. At the annual general meeting held in September last year, then general manager Geoff Houston said LIME would ‘more than double’ its marketing budget for the 2010/2011 financial year.

A 23 per cent reduction in depreciation recognition, to $981 million mitigated a more significant decline in operating expenses. According to the statement by the chairman, “the decrease reflects increased depreciation in prior quarters as a result of the review of the useful economic lives of the asset base”.

Losses also occurred in the company’s foreign exchange line, with a $13 million loss in the quarter under review, versus a gain of $89.6 million in prior year’s quarter as interest rates continued to decline as a result of the Jamaica Debt Exchange. Other finance costs declined however, $472 million, but this was not enough to mitigate an overall loss of $480 million in the quarter as finance income reduced 77 per cent to $4.8 million.

Garfield Sinclair, managing director of LIME Jamaica however conceded that the company still has a way to go back to profitability despite a vastly improved image and the mobile innovation. “We’re now seen as innovators again, with exciting new services like mobile TV, which will only enhance our ability to permanently attract mobile customers to our network,” Sinclair also said in a statement on the results.

“Our landline business will receive a much needed facelift in the coming quarter and has already begun to show renewed signs of strength in December with a 19 per cent increase in Gross Adds over the previous year,” Sinclair said. In September last year, chairman Chris Dehring noted that LIME had already added over 100,000 new customers to its roster and would aim for more before the end of that year.

The company is also planning an improvement in its broadband penetration particularly in relation to small and medium enterprises.

“We believe broadband penetration continues to be far too low given its positive effect on GDP growth and we will therefore continue to work with the government and our communities to expand broadband service in Jamaica,” Sinclair said.

Dehring remains positive about the future of the more than 140 year old company. “We continue to focus on our 3G expansion and investment in improved service delivery and customer service. We believe this will position us strongly to capitalise on the improved economic climate when the recovery begins,” he said.

  • @ Alfreda thats 3 $20 phone cards @ $50, $30 gas from Porky’s gas station, one organge and green outfit from Muck A Muck’s, 3 Sands Beer and a 3 piece MIX from KFC with a biscuit!

  • Can someone tell me how much is 1.3 billion JAMACIAn dollar?

  • PM Ingraham will not contest the scheduled 2012 General Elections. All he is doing is playing a game to encourage Christie, Brave Davis and Roberts to get comfortable in the mindset of focusing their attacks against him as the government, and not the FNM as the government. Have you forgotten that the PM took his decision to run or not to run, up to the last minute before turning over the leadership to Tommy. The only question is will the PM leave his walking away to late, for the party to recover from the growing contempt held by Bahamians. The bigger question as I see it is if Symonette, Foulkes, nor Tommy, will not be acceptable to step in to lead the party into to an election victory, who is it to be? Maybe Minister Deveaux, considering he already knows were to put his hands on a complimentary Luxury 16-Seater Helicopter, for family islands campaigning?

  • President Hosni Mubarak RESIGNS!!! Let’s do it BahamianS! Hubert GAT TO GO! CANNOT BE TRUSTED ANY LONGER! THERE IS ONLY ONE GOD! We have lots more to fight for than Egypt!

  • Bahamas Press you need to go online and read todays (13.02.2011)Jamaica Gleaner.Under the caption “LIME CONTINUES TO BLEED-BUT BOSSES STILL OPTIMISTIC” it shows that ever since Lime lost its MONOPOLY status in the telecom market in Jamaica it has been A FINANCIAL FAILURE.Indeed the Gleaner pointed out that during Lime’s 2009-2010 financial year it loss 3.4 billion jamaican dollars and is on pace to SURPASS those losses this year.From March,2010-December,2010 Lime has experienced 2.44 BILLION JAMAICAN DOLLARS IN LOSSES.Indeed this is the case THROUGH OUT THE CARIBBEAN,LIME(C&W) CANNOT COMPETE!!!Lime can only make money in a MONOPOLY ENVIRONMENT,but don’t take my word ask JAMAICA AND THE OTHER CARIBBEAN COUNTRIES THAT HAVE A LIBERALISE TELECOMM SECTOR.

    • Bahamians, what is worst is the following
      1. Cable and Wireless communications is a brand new company created in March 2010, with it’s first annual report due March 31st 2011.

      2. Cable and Wireless interim report as at September 30th, 2010 shows C&W comunications in debt of over 900 million dollars

      3. One of the reasons why they separated to make two different companies was to sell one of them, either C&W Comunications (LIME) or C&W Worldwide

      Sad, we should all go down town on the 23rd, I will be there with my family.

  • Ask any Bahamian business owner if they would agree to sell their company with them agreeing to be held hostage to a $100 million penalty clause, and on a company that only sold for only $210 million? Man that is nearly half the darn selling price. This unsound clause in the BTC agreement is more than enough reason to stop this disposal price sale now. Both the FNM and C & W must know that any new government is going to revoke this deal. Go ahead and ask the PM who is an expert at revoking contracts agreed to by the PLP.

  • Is Hubert A Ingaham a Jamaican who sits as the Bahamian Prime Minister?????Is he a Bahamian????? The FNM and their spineless MPs celebrity status will be over in a few months…they are forecasted to win 8 seats they will sink like the titanic did in icy waters. they have no more power than a vote…we will have the last laugh…haha ha ha , ho ha!!!!!!!!!

  • billy bob

    Is Hubert A. Ingaham a bahamian?????????????????? The FNM party and his spineless MPs will go down with the titanic in icy waters….they are forecasted to win 8 seats. the rest can kiss the celebrity life goodbye in a few months!!!!!!!We the people will have the last laugh, for you all have no more power than a vote, for you never had to display intelligence or beauty to gain access to people’s trust in you…Ha Ha Ha Ha…

  • The NEED for BTC by C&W follows the same strategy employed by major pharmaceutical companies, particularly those in the USA. They search for smaller research companies who have recently had major drug discoveries; companies who after years of trials testing have recently been granted final approval by the FDA; companies who are relatively small but have what is known in the industry as block buster drugs that are under patent rights with many years of exclusivity of rights to go, then them buy such companies to add the products and talented research personnel to their arsenal. This ensures the giant drug companies ALWAYS HAVE A WINNING PRODUCTS ON THE MARKET AND PROFIT MARGINS TO MAINTAIN THEIR STANDING AS WORLD LEADERS. C&W is a creature of that business culture. Our government sold too cheap, considering the enviable geographic position that this country is in to offer linkage to the USA, Cuba (when the embargo is removed) and remainder of the Caribbean. Also, we are ths closest English speaking Caribbean nation to the USA, which makes us a perfect fit should C&W decide to move any of its head quarters closer to main land USA. Finally, C&W will inherit ALL of the benefits of our decades of stable democratic governance and the benefits of all treaties that The Bahamas enjoys in trade relations with the USA and other countries. These factors were not considerations if the sale price is any indicator of how our government negotiated. We (voters) must take responsibility for selecting the people who are in parliament. They represent our collective intelligence, so when the people from C&W found out how easy it was to out wit them it establishes their opinion of Bahamians generally. The moral of our BTC sale to C&W story is IF YOU WANT SMART DECISIONS YOU MUST ELECT SMART PEOPLE, REGARDLESSW OF WHICH PARTY THEY ARE ALLIGNED WITH. To do otherwise will recreate another moment just like this… guaranteed. Look beyond the labels in 2012, please.

  • Who are the people behind CW/Lime? If what you are reporting is true I must wonder whether there is some sort of personal benefit to be gained by someone with a personal or business relationship to the Bahamian decision-makers. I truly hate to be suspicious but this doesn’t add up otherwise.

  • B.P we have been lied to as if we dnt. have any sense,lies lies and more lies.we must ride our country of this administration(f.n.m,foreign national movement)

  • w. taylor

    did ingrum say in the house they will receive installments pay from c&w somthing like a 100.000.000
    first then 80.000.000 if this is tru c&w will used btc profits to pay that or am wrong?? will c&w be runing btc and not even pay in full. like atlantis come here broke and get rich of us.

    • No You are thinking about the payments the govt has tot make to BTC if they break the exclusivity clauses.

      “The Government undertakes to pay all loss and damage calculated on the same basis as contractual damages subject to a maximum amount of US$100,000,000 if one or more additional Cellular Licences are issued prior to the first anniversary of Completion; US$80,000,000 if one or more additional Cellular Licences are issued from the first anniversary up to and including the second anniversary of Completion; US$40,000,000 if one or more additional Cellular Licences are issued from the second anniversary up to and including the third anniversary of Completion; and where a third Cellular Licence is issued after the third anniversary but prior to the fifth anniversary of Completion, US$20,000,000.”

  • BP you are spot on!! The Jamaican media is reporting the latewst C&W fiasco. I wonder if Eileen Carron will highlight that horrible performance in her racist rag. The truth bretheren is that Ingraham “married the Golin” with this deal. We need a Commission of Enquiry for this transaction, and to investigate the profligate conflicts of interest by its chairman Julian Francis which have been endorsed and supported by Ingraham and his government.
    FNM M.P.s now need to rebel against this deal or go down with the ship.

  • (The media in the Bahamas sucks!)

    BP, the privatization committee is getting a free pass. It was their job to do due diligence on all the companies that tendered bids and then advised the government on a course of action.

    Cable & Wireless shouldnt even be at the table because like Papa admitted in the House, they came to the table 7 months after the deadline to tender a bid had pass. The committee shouldn’t have even looked at their bid as they were disqualified right of the bat!

    What has me scratching my head is, if the committee knew subsidiaries of Cable and Wireless are hemorrhaging money, what did they see that made them think Cable & Wireless has the financial ability to backup all that LIME Bahamas has promised to do?

    LIME Jamaica lost $1.3 billion? If that is in Jamaican currency then that translates to a loss of $15 million in the quarter. BTC had over $100 million sitting in the bank and the government took out another $15 to prop up the unemployment scheme.

    You can see why Cable & Wireless wants BTC. BTC is going to make their LIME subsidiary look more healthier than it really is. And by extension, its going to make Cable & wireless books look healthier than it really is.

    But after reading the article several times, its seems as if LIME Jamaica is throwing stuff against a wall, hoping something sticks. In other words, as the article writer says in the first paragraph, the folks at LIME Jamaica “hopes” the company can become profitable in the future! they are guessing straight through!

    LIME Jamaica is a sick company that is in need of an infusion of cash and subscribers. For BTC to partner up with its parent company that has subsidaries in such financial trouble, is an indication that the parent company itself, is in deep do do.

    From all apperances, Lime Jamaica is more poorly ran than BTC. And if the sale of BTC goes through, these same ball heads who running Lime Jamaica, will no doubt end up right here in the Bahamas. This is not good for BTC and by extension, the Bahamas.

    Now that the MOU has been tabled, why hasnt the other companies and their offers been made public as well? Th people has a right to know and look at the other offers and determine if they were worse or better than Cable & Wireless’ bid.

    If LIME was the best of the bunch, according to the committee, then the committee should have advised the government not sell BTC.

    Cable & Wireless, the parent company, is being weighed down by the debt of its subsidaries like LIME Jamiaca. There is no need for BTC to get in bed with this company.

    The other companies that tendered bids may not have the experience of a Cable & Wireless, but they probably dont have the level of debt or the bad track record as well.

    The privatization committee failed the people of this country. If no companies were worthy of BTC, then they should have advised the government as such.

  • Yes this is the company that mr.Ingraham has all praises for.A company that is HAEMORRHAGING MONEY,LOOK AT THE REPORT C&W LOSS MONEY IN EVERY SECTOR IT IS INVOLVED IN!!!Now mr.Ingraham WANTS A SUCCESSFUL BAHAMIAN COMPANY TO PROVIDE DIVIDENDS FOR JAMAICAN AND ENGLISH SHARE HOLDERS!!!Please Bahamas Press tell me WHY DOES MR.HUBERT ALEXANDER INGRAHAM HATES THE BAHAMIAN PEOPLE SO MUCH?WHAT WRONG HAVE WE COMMIT AGAINST HIM.It seems that mr.Ingraham wants to reduce our standard of financial success to that of a JONSER!!!

  • WOW….these guys are really struggling.

    When I heard on the talk show today that they buy old equipment that BTC take out to install at their sites I was surprise. I really thought they were more savvy than BTC but they are not.
    I’m convinced that we can do better for ourselves.

  • This is what you get when you tired of what you got. What’s next. Let the ball roll they know break when they see them rolling in. Best gambling game ever with telecommunication being so important.