A Cable and Wireless cellular store on Knutsford Boulevard in New Kingston. The company posted 23 per cent increase in mobile revenues. - File

Cable & Wireless Jamaica Limited has given up on collecting more than half a billion dollars in debts, and has written off the receivables in its second quarter while at the same time chalking up net losses of $478.7 million for the period.

Its half year losses were $506.8 million, worsening the depressed earnings legacy left by past president Rodney Davis, whose overnight departure came two months into the September quarter after two years with the telecoms.

At the end of June, among C&WJ's more than $4 billion of receivables was an outstanding $609 million linked to what the company said were 'unbilled amounts' as well as recoverable out-payments from local and international carriers on whose networks C&WJ calls terminated.

"We reviewed the recoverability of these amounts at September 30 and as a result this amount was reduced by $542 million," the company said in its quarterly earnings report for September.

C&WJ president and CEO Phil Green told Wednesday Business that unbilled amounts and outpayments are done on a monthly basis.

"The majority of the reduction in accounts receivable relates to a reduction in our estimate of unbilled amounts," said Green, an Australian who replaced Davis in August.

"The reduction relates predominately to the second half of last year," he said, noting that the adjustment was done in line with accounting standards and were fully audited.

C&WJ reported depressed income on its fixed line business, including its prepaid Homefone product on which sales fell 28 per cent.

Going forward, Green said growth strategies for its fixed line would focus on "major improvements in service, specifically in relation to provisioning and repair times."

Added the CEO: "We anticipate that this in turn will drive a turnaround in demand for the fixed line service. In addition, we are also looking to re-position our fixed line product family, both prepaid and postpaid."

Overall revenues were off by more than $1 billion to $11.1 billion while costs associated with making those sales rose by $490 million to $4.8 billion, reflecting a worsening gross profit margin on the half year results of 56 per cent, compared to 64 per cent in the year-ago period.

Bigger selling, administrative and marketing or SAD costs plus other operating expenses further erased gross profits to return a loss of $98 million on operations. Finance costs and foreign exchange conversion losses pushed the company deeper into red for a pretax loss of $807 million, but a $300 million tax credit helped contain net losses to $507 million or -$3.01 per share.

C&WJ has linked some of the expenses to "poor execution of a number of outsource contracts", but also cites damage from Hurricane Dean and ongoing theft of its cable as contributing factors.

Statement

The company said in an accompanying statement to the accounts that product launches and price promotions and the re-assessment of receivables from other telecoms providers were poorly handled.

Its mobile and broadband business continued to perform well for the telecoms, growing by eight per cent, driven by a 38 per cent increase in GSM customer numbers, while broadband sales rose by 23 per cent compared to the same period last year with continued acquisition of ADSL and VoIP customers.

In its outlook, the company pointed to the change of president, a position now held by Green, who is also a C&W International board member and has announced that a new chief financial officer will join the company at the end of November.

"Furthermore, a number of senior management appointments have been made over the past few months in order to drive the business transformation programme," said the company adding that in the company's last six months, the team will refocus on marketing and sales, and improved customer service.

Green advised Wednesday Business that the new CFO would take up his position at C&WJ next week, but was holding back on identifying the new recruit pending an announcement.

"The individual has previously held CFO positions in both cable and telecoms companies in the Caribbean region and has business transformation skills," he said.

"In the meantime, we have been provided with interim resources from Cable & Wireless International."

lavern.clarke@gleanerjm.com