Rodney davis, president of Cable and wireless Jamaica, has reported bigger markets in Internet, fixed line and mobile, resulting in higher profits of $2.05 billion. - File

Cable and Wireless Jamaica Limited (C&WJ), claiming a vibrant Internet and mobile market, grew its revenues 9.5 per cent to $24.68 billion, from which it carved net profit of $2.05 billion for its financial year ending March 31.

C&WJalso got a nudge from its fixed-line business for the first time in four years.

The company's balance sheet is also $2 billion stronger, with total assets of $40.1 billion; while shareholders' equity, boosted by $1 billion of accumulated profit, was an improved $20.3 billion (2006: $19.5 billion).

Much of the improvements on the balance sheet were realised from a more than $1 billion increase in the value of fixed assets to $27.95 billion. But the telecoms also reported prepaid expenses of $1.17 billion, more than double its 2006 position of $491.6 million.

The company said it would clarify the prepayment and other figures today in the absence of notes to its accounts.

At first brush, its negative working capital of $1.2 billion suggests an unhealthy short-term liquidity crunch. Its current ratio estimated at 0.87, suggests that the company would, in a squeeze, only be able to cover 87 cents of every dollar of short-term liabilities, including accounts payable and debts, repayable within the next year.

Bridging funds

But in its statement to shareholders, co-signed by director Andrew Cocking and president Rodney Davis, the telecoms assures investors that the more than three billion growth in current liabilities to just under $9 billion was related to $3 billion of bridge financing to pay down 'inter-company' loans to fund network expansions that were due to C&W Plc by March.

The bridging funds have been repaid and replaced with a longer-term 'facility'.

"Without the impact of the short term bridge financing, working capital would have increased by $1.094 billion," said the statement.

The company has claimed a 26 per cent growth in its mobile revenues, saying much of it was realised from new clientele on its prepaid network.

Its prepaid market was up 28 per cent, the telecoms said in its statement to shareholders, linking the segment's performance to new promotions and the expansion of its 'Anyone' suite of products, under which C&WJ subscribers pay a flat rate when making calls on or off the network.

Products launched

"During the year, we launched several mobile promotions designed to increase customer calling within our mobile network," said the company, adding that the largest were 'Sunday Chat' and 'SMS Happy Hour'.

"We also leveraged the very successful 'Anyone' plan by launching additional offerings such as the Anyone 'Team' - a friends and family offering, and 'Extra' - an offering focused on content to accommodate the different lifestyles of our Anyone plan members."

Its new Homefone prepaid fixed-line service, launched last June, has grabbed 82,000 customers in nine months to the end of March, the telecoms said, resulting in an 8.0 per cent increase in the company's fixed-line operations - the first in four years that this business segment has seen growth.

C&WJ has not said what its projections were for Homefone, but described the product as "extremely successful", suggesting it had surpassed estimates.

Based on Homefone's reported contribution, C&WJ's fixed-line market would top one million customers, by Wednesday Business estimates.

Internet subscriptions

C&WJ, whose financials were released on the weekend, also reported large boosts in ADSL subscriptions by 96 per cent, and VoIP services, 241 per cent.

"As a result of very strong customer growth, we achieved 75 per cent revenue growth within our Internet product portfolio," said the statement accompanying the accounts.

But higher outpayments, the cost C&WJ pays to other networks for call termination fees - which grew $842 million, from $5.8 billion to $6.7 billion - together with other cost of sales, plus a write-down of assets or depreciation charges, and the servicing of debt, gobbled up more than $20 billion of revenues.

Overall, cost of sales grew 21.7 per cent to $8.7 billion, while operating expenses climbed marginally higher to $12 billion.

Those costs, the three largest of which were outpayments, admin-istrative and selling, and salaries, respectively, stripped the group's earnings before interest and taxes (EBIT) to $3.96 billion, but that outcome was $446 million better than the 2006 EBIT.

C&WJ grew its net profit by 6.8 per cent in the year under review, resulting in increased earnings per share of 12.2 cents (2006: 11.4 cents). But the greater strength of the company's performance was reflected in its pre-tax earnings, which grew 18.6 per cent to $3.14 billion.

In terms of efficiency, the company's profitability ratios showed improved performance, with the exception of its gross profit and net profit margins, with the latter dipping from 8.5 per cent in 2006 to 8.3 per cent.

lavern.clarke@gleanerjm.com.