FLOW parent promises no disconnections
Published:Wednesday | May 13, 2020 | 12:16 AMSteven Jackson/Senior Business Reporter
Liberty Latin America, the parent company of telecom FLOW, indicated that it will hold prices firm and generally not disconnect customers in arrears for the moment.
The policy gives heed to the entreaties of governments for telecoms to be lenient in the face of work from home and shelter in place programmes as virus-fighting measures.
Those measures have seen a double-digit increase in customer usage of mobile, fixed and Internet services.
Operationally, this rise in volume will not necessarily come with an expected rise in revenue for the telecoms, given the sectoral fallouts in tourism, for example, Liberty said.
Lifeline Products
“We are rolling out lifeline products to customers in need and generally not disconnecting customers for non-payment at this time,” Chief Financial Officer Chris Noyes said in an investor briefing this month.
The telecom has withdrawn its previous full-year guidance on its financial performance due to the uncertainty surrounding the COVID-19 pandemic.
The slippage in its numbers is already showing up in its earnings report. In the March quarter, the group made less revenue of US$931 million, compared to US$943 million for the comparative period in 2019.
Jamaica contributed $96 million of the revenue made in the March 2020 period.
The company also announced plans to cut capital spending in its markets by US$150 million due to the COVID-19 pandemic. It expects the pandemic to cut revenues somewhat; however, Liberty Latin America still expects to “deliver positive cash flow this year”, Noyes said.
The revenues will affect some segments of the business more than others, with mobile expected to take a hit due to its reliance on price-sensitive prepaid customers. Those customers are topping up less due to stay-at-home measures, but also due to job losses, said Liberty CEO Balan Nair. On the flip side, the traditional cable business is seen as more reliant.
“On the subsea side, we are not taking price increases; we are taking a lot more volume. Our customers need more capacity and we are not being greedy,” Nair said.
Efforts at comment from FLOW Jamaica on the degree to which the Liberty policy is applicable to this market elicited no response up to press time.
The impact from COVID-19 started affecting the telecom in the second half of March.
Liberty Latin America said the traffic on its subsea cable network increased by nearly 50 per cent, by 40 per cent for its fixed network and 11 per cent on its mobile network. The company also added capacity to handle the increased traffic.
“We are running this like a hurricane just hit. But unlike a hurricane, we have nothing to rebuild. We are realistic about the challenges that we face and we will stay ahead of it. That’s why we are confident of the future,” said Nair.
The recovery will take time as many of the islands are highly dependent on tourism, which in turn will grow at the pace of the travel recovery. Liberty Latin America said that it earned US$15 million per quarter from businesses in hospitality sector, across its markets.
Nair said that Liberty will weather the pandemic due to its strong management, strong balance sheet and free cash flow generation; and suite of products and services.