Bermuda Stock Exchange

One: a ‘quad-play’ telecoms group

  • Stabilising: the graph maps the price movements of One Communications shares in recent years (Graphic by Byron Muhammad)

The Bermuda Stock Exchange has this year launched its “Own Your Share of Bermuda” campaign to raise awareness of opportunities to invest in the island’s public companies. The Royal Gazette is supporting the effort by publishing weekly features on each of the 13 domestic companies listed on the BSX.

Telecommunications have developed at a phenomenal speed in the last two decades, and that rate of change has been mirrored by the evolution of One Communications Ltd.

Founded in 1998 as KeyTech Ltd, this diverse company is involved in mobile phone, internet, subscription television and data solutions.

The last three years have been particularly busy for the company in terms of mergers and acquisitions. It has become a “quad-play” service provider, offering mobile, landline, cable television, and internet under one roof.

It has a market capitalisation of $116 million, with assets of $248.1 million.

During 2016, the company rebranded its operating subsidiaries Logic Communications and CellOne, as One Communications. Shortly afterwards KeyTech’s legal name was changed to One Communications Ltd.

The company’s other subsidiaries are Cable Co Ltd, and WestTel Ltd in the Cayman Islands.

Between 2012 and 2016, the company’s share price fluctuated from a high of $6.49 in 2012 and a low of $1.95 last year.

This week the stock has been trading at $2.75 on the Bermuda Stock Exchange.

In its most recent interim financial report, released in December, Frank Amaral, chief executive officer, said the company’s name change streamlined its positioning of fixed and mobile services to customers. He spoke of planned improvements to its customer care and product offerings, and upgrades to its core networks, such as providing islandwide 4G LTE coverage by the end of this year.

Last month a multimillion-dollar upgrade of the Challenger subsea cable system, operated by Cable Co, was completed. It can now handle vastly more data traffic between the island and the US.

And hundreds of miles of new fibre-optic cabling and support equipment is being installed on the island by the company, which is promising speeds of up to 200 Mbps with its FireWire internet.

It is almost a year since the company completed a deal with US-based ATN International, whereby ATN acquired a controlling 51 per cent. One Communications benefited from a $41 million equity injection that was part of the deal, and by acquiring ATN’s part-ownership stake in CellOne.

Since completing the transaction with ATN, the company’s financial position has strengthened. It has retired $24.7 million of subordinated debt and repaid $3.2 million of its bank borrowing.

For the six months to the end of September, its consolidated unaudited profit was $24.1 million, up from $0.5 million in the prior year. This was mostly the result of the $22 million gain, a preliminary estimate of fair value after it acquired full ownership of CellOne.

Earnings per share for the six-month period were 64 cents, compared to three cents for the same period in 2015, based on restated earnings.

In past years a quarterly dividend was paid, however the last regular dividend was in July 2014. A special dividend of 75 cents was paid to shareholders last May as the deal with ATN closed.

The company, which acquired CableVision in 2015, has reported a drop in television revenue as customers “cord cut” and source video content through other internet-based options, however its data revenues have risen through a combination of more subscribers in Bermuda and Cayman, and increasing demand for higher bandwidth products.

In last year’s annual report, chairman Gary Phillips was upbeat about the future trajectory of the company.

He said: “As an integrated group in Bermuda, and with the benefit of the new capital our investments will accelerate and lead to expanded services for residential and business customers in Bermuda and Cayman.”

Disclaimer: This material is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. Past performance is no guarantee of future results