Phil Green, president of Cable and Wireless Jamaica. The telecoms reported net profit of $13 million in the December quarter, but remains $473 million in the red year to date December 31, 2007. - Contributed

Cable and Wireless Jamaica (C&WJ) Limited, in its first clear quarter under Phil Green's leadership, posted a slight profit of $13.5 million at the bottomline in its third period ending December 31, 2007, from flat top-line income of $6.22 billion.

The company's net profit performance in the December period compared favourably to the preceding September quarter when losses were more than $478 million, but was substantially depressed when measured against the $453 million profit made by C&WJ in December 2006.

The heaviest drags on the company's margins were a 37 per cent increase in administrative and selling costs to $2.1 billion, and 11 per cent higher outpayments or termination fees, which amounted to $1.7 billion.

Total expenses climbed by 17 per cent to $2.86 billion, a position the company suggested could have been avoided had better business decisions been made in the past.

"Certain operating costs have increased due to poor execution of a number of outsource contracts and redundancy costs incurred as part of the business restructuring," said directors Green and Andrew Cocking in a statement to the accounts.

Green's history of losses

Green, who has been in charge since last August, replacing Rodney Davis, is also still faced with a near half a billion of losses that the British-owned company has racked up over nine months, in the April to December 2007 period.

At balance sheet date in December, the C&WJ had an accumulated deficit of $698 million - relative to accumulated profits of $1.2 billion a year ago - which served to erase just under $2 billion of the company's equity.

The result was a reduced capital base from $20.6 billion at December 2006 to $18.6 billion a year later. Total assets, however, were up by $1 billion to $40.1 billion, year to year.

Falling revenues

Green is also constrained by falling revenues, which slipped by more than a billion from $18.5 billion to $17.3 billion - suggesting that the company got no bounce during the high shopping season - at a time when new competition is entering the mobile market, the more vibrant growth segment in phone service delivery.

The telecoms board, however, in a forward-looking statement, said the company expected improved results in the medium term, basing the forecast on new strategies to improve the quality of its network, improve service delivery, reshaping its internal controls to drive efficiencies, and additions to its senior management team, notably new CFO Eduardo Ryan who came on board in November.

"The company has realigned its strategy to better meet market challenges and customer service expectations," said the C&WJ directors.

The company's $5 billion capital investment programme, for example, ongoing for more than a year, includes $2.8 billion to add 120 cell sites in a build out of the network.

Operationally, C&WJ made $288 million of profit in the first nine months, but a $1 billion debt servicing charge plunged the company into red.

C&WJ is currently $19.8 billion in debt, $3.04 billion of which is short-term bridge financing loans, while its long-term liabilities include $4.1 billion owed to its parent, C&W Plc, and $4.6 billion of deferred taxes.

The telecoms posted losses of $493.3 billion over the nine months, but while this was a slight improvement on the six-month losses of $507 million, it represented a total erosion of the $1.34 billion in net profit that C&WJ had on its books in the 2006 nine-month period.

The company's position would have been worse were it not for $272 million of tax credits, used to offset about a third of the $766 million in pre-tax losses during the period.

lavern.clarke@gleanerjm.com