Columbus Communications, the holding company of Flow, the cable provider, is in expansion mode. Columbus, which started off with equity of between US$40 and US$50 million, has invested about US$1.1 billion across the Caribbean in its eight years of existence and is now conservatively valued at US$2 billion, explained John Reid, the president of Columbus Communications and Brian Collins, the managing director of Columbus Communications Trinidad, in an interview on Sunday. Flow, which has been operating in Trinidad, but not Tobago, since 2005, has in the last seven years also become synonymous with cable television. But the company is planning two new services, which will redefine cable television as it moves the stationary television based, home device out of the house and on to the handsets of customers. This new service, called Flow-on-the-go, will be launched next month when the company’s landline customers will be able to access their Flow home phones on their mobile phone.
This means that the landline voice service will be taken “out of your house,” said Reid. The company is also planning to introduce another aspect of Flow-on-the-go that would allow the company’s customers to access cable televsion on their mobile devices by the fourth quarter of this year. “With Flow-on-the-go for cable television, you will be able to watch your TV wherever you are in Trinidad on your smartphone or your tablet. And it’s not limited to just Trinidad. If you are in Miami, in a hotel room with wi-fi, you can log-on and watch your home tv from Flow,” said Collins. This service will also allow customers to manage their account and purchase cable-related products and services by using their smartphones or tablets. Columbus, as well, is planning to launch a new cloud-based recording service before Christmas, as yet unnamed, which will also be available on smartphones, tablets and other mobile devices. “Customers will retain their set-top boxes, but we will rent them space in the cloud. This will take away the ongoing cost for customers because there is no rental charge every month. You only buy what you buy, but it really does make the service more ubiquitous for us and makes it more user friendly.” The service allows the head of the household to exert parental control on their children’s viewing habits. Both Reid and Collins said that they expect the introduction of the cloud-based recording system and cable television on to mobile devices will drive the company’s revenue.
“We think that it will change user patterns. These will be very sticky products and will drive penetration,” said Collins, holding up an Ipad and showing off a schedule of programmes, at a conference room at the Hyatt on Sunday afternoon. Reid added: “What we would expect is that because customers will have the opportunity to take their content with them, that will change their user habits as they will rent more and buy more.” Reid said Columbus is the first company in the world to introduce the cloud service and Trinidad will be the first country in which the service will be introduced. Both Flow-on-the-go and the cloud-based service are part of a new IPTV platform which cost US$3.5 million. Columbus is not only expanding by offering new services to its customers, it is also planning to extend its footprint across the Caribbean. At the end of May, the company entered into a five-year financing arrangement, which gives it access to funding of US$225 million. The Senior Guaranteed Unsecured Notes Facility, which is due in 2017, was issued 9.5 per cent due 2017, which will be paid quarterly and is callable after 2.5 years. According to the statement announcing the financing arrangement: “The company intends to use the net proceeds from the Notes to accelerate the completion of current capital plans, fund potential future acquisitions, enhance balance sheet liquidity and flexibility and for general corporate purposes. “Entering into the Notes Facility will provide the Company with additional proceeds to capitalise on near-term opportunities and the flexibility to prudently manage its financial position.”
The company initially drew down US$82 million from the Notes Facility, some of which was used in a near-term opportunity that arose recently—the acquisition of TeleBarbados, the cable company on that island. The company is on the lookout for more acquisitions in the region, Reid said, and is planning to have a presence in Tobago by the middle of next year as a result of the fibre optic project that is being run between Trinidad and Tobago. Reid said that there is now cable in 280,000 homes in Trinidad, while the company has 140,000 cable subscribers, about 80,000 broadband customers and close to 20,000 customers who use the company’s landline service. In terms of average revenue per user (ARPU), Collins said that cable television generates US$41, broadband about US$28 and voice US$22.
Reid said the prospects of the company’s ARPU growing in Trinidad were good. “On the cable side, just to give you an example of why it grows: When we came here we had analog customers. When we started converting to digital, the customer had many more options. When the average analog customer converted to digital, the increase in ARPU alone was between 23 and 24 per cent,” said Reid, adding that the existing customers often chose to upgrade from the basic package, which did not increase in price. Of the four services the company provides in Trinidad, its broadband service, which was launched in 2007, is growing the fastest at between 20 and 25 per cent, while the growth of voice (landline) is over 20 per cent and cable is growing at between eight and ten per cent, Reid said.
The company’s business model has changed in the seven years it has been operational in Trinidad, Reid said, noting that when it first started providing cable service in 2006, that comprised 98 per cent of its revenues. Now cable television contributes 60 per cent of its revenues. Columbus also provides a business-to-business service, which has attracted between 4,500 and 5,000 customers and which now comprises between 25 and 28 per cent of the company’s revenue. After Columbus Communications was established in 2004, its first asset in the Caribbean was Cable Bahamas, where it acquired 30 per cent of the cable provider. That stake was divested in 2009.
In 2005, Columbus purchased CCTV in Trinidad, Merit Communications (the cable provider) in Jamaica and ARCOS (Americas Region Caribbean Optical-ring System), which provides a fibre optic submarine communications cable undersea linking the Caribbean to Latin America and to Florida. Apart from Jamaica and Trinidad, Columbus now has operations in Curacao and Grenada will start up operations in Barbados this year. Reid said that Columbus made an initial investment of US$110 million in acquiring CCTV—which comprised four cable providers— and that that initial investment has paid for itself in less than the seven years that Columbus has operated here.
“That initial investment has been an unqualified success,” said Reid, adding that Columbus has invested an additional US$250 million in Trinidad in seven years and that it expects to invest US$40 million in 2012 and about the same amount next year.
“By any benchmarks that we had for the country, Trinidad is deemed to be successful,” Reid