(Jamaica Observer) The parents of LIME and Flow have partnered to build out their underwater fibre-optic network and international wholesale capacity business.
The joint venture between Cable and Wireless Communications (CWC) and Columbus Networks will result in the combination of 42,000 kilometres of cable connecting 42 countries in the Caribbean, the US and Central America.
Columbus will have 72.5 per cent stake in, and management control of, the joint venture, called CNL-CWC Networks, with CWC controlling the remaining 27.5 per cent share “with appropriate minority protections”, apparently reflecting the asset value of the respective companies.
CWC’s assets subject to the joint venture arrangement had a gross asset value of US$108.2 million, and recorded a loss before tax of US$0.9 million in the year to March 31, 2013, while Columbus’s assets were valued at US$304.6 million and recorded a profit before tax of US$29.3 million in the year to D
ecember 31, 2012.
“The alliance positions CWC strongly to meet the data capacity demands of its retail operations in the future, as well as optimising its capital expenditure commitment to its undersea cable networks,” said a statement from CWC. “Demand for data capacity is growing rapidly in this region, driven by the increasing availability of, and consumer demand for, mobile data and fixed broadband services.”
Both companies have recently significantly strengthened their capital bases to pursue expansion opportunities.
The UK-based telecommunications company inked a deal in January to sell its business in Macau for US$750 million, following a December agreement to dispose of its businesses within its Monaco & Islands division for US$680 million, from which it received US$601 million last month, while it still awaits approval for the transfer of CWC’s business in the Seychelles.
Columbus has been aggressively pursuing regional expansion since in started operations in 2005, while more recently it raised capital through the sale of new shares, representing more than 20 per cent in the company, to billionaire, cable TV pioneer and telecommunications veteran Dr John Malone.
The net proceeds from the issue of new shares will help Columbus capitalise on near-term opportunities and provide additional flexibility to prudently manage its financial position, according to the company.
It will also be used to “accelerate the completion of its current capital plans, fund potential future acquisitions, enhance balance sheet liquidity and flexibility and for general corporate purposes”.
“We have budgeted close to US$200 million to further invest in 2013 with a huge focus on cloud-based services,” said Brendan Paddick, chairman and chief executive officer of Columbus. “Since its inception in 2005, Columbus has invested well over US$1.2 billion in capital expenditures… we remain committed to building the region’s most robust terrestrial network.”
