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Telecomms
Continued from page 18
line for years. Yet Bristow maintains: “Gibtelecom, as the leading telecommunica- tions provider on The Rock, has to do things properly and sensibly. Yes, perhaps where others operate in ‘grey’ areas, we choose not to - but we are looking at the matter again to see if there is a way we can bring certain TV and DVD services. I suppose we are encouraged to do so by the competition.”
The Gibraltar government bought the 50% stake it didn’t own in Gibtel from Telekom Slovenije in January for £47.7m, a move prompted by privatisation of the eastern European telecoms giant. Dr Joseph Garcia, deputy Chief Minister, said: “There have been several expressions of interest, [but] the Government is not in a hurry to find a suitable partner.”
In the meantime, Bristow emphasises: “Gibtelecom, whether partially or fully State- owned, has to operate within what is a very clear umbrella of the law and, therefore, we are not in a position where we can afford to take risks in a way that more margin players perhaps can.” He thought it too early to say how successful his competitors might be.
However, it’s a different story with mobile, where the demand for data on the move – even live or catch-up TV shows – is growing exponentially. Mobile, where Gibtelecom dominates, “is our really big potential growth engine”, and “competitors haven’t seemed to fair as well”, Bristow reported. Mobile produces £12.3m for Gibtel -up by 2% in 2014 after price reductions - and at 29% it is the largest revenue sector.
A license to provide 4G services to 95% of Gibraltar’s population by the end of the year was enhanced for Gibtel by a £3.5m deal with Ericsson to provide 4G+ services providing 150mps downloads for mobile users. Fifth generation mobile facilities are on the horizon.
While u-mee is not extending into mobile connections, it plans by the year-end to compete through a mobile application that links to Sapphire’s switch and with VOIP subscribers keep their existing ‘phone numbers they gain a new number that will ring in the home and mobile at the same time anywhere in the world.
Smile, a small mobile ‘phone operator owned by Gibraltar-registered EaziTelecom, has been offering cheap pre-pay mobile ‘phone services for two years, and was reported to be up for sale last year, however, no company representative was available to comment.
Fierce price competition
For Gibtel, the big diversification has been its US$31m investment for a 4.1% stake in the Europe India Gateway (EIG) submarine telecommunications cable, selling unused capacity to telcos worldwide for the past two years. Around half of its wholesale capacity has been taken amidst “fierce price competition” from Gibtel’s international partners, “some with submarine departments much bigger than our entire company”.
The investment has a projected 15% return over the full 25 years expected EIG life and was 50% funded from Gibtel working capital, the balance via a bank loan. The com- pany has 15 carrier partners, including a small amount into Europe for Telstra, the Australian telco, as well as 15 consortium members.
Now, Gibtel claims to be just about “the biggest, smallest global carrier around the world - in terms of reach” and Bristow notes: “No-one to my knowledge of our sort of size has moved into this global communications space.” He expects shortly to sign a deal with Asia “to carry a substantial amount of traffic on a back-to-back deal”.
Bristow has ambitions to join other submarine cable consortia (subject to Board and shareholder approval), and sees connecting further to Africa, perhaps via Morocco, as a natural long-term objective - “it’s not an overnight win” involving “quite serious money”.
The 2014 annual report for Gibtelecom shows net current assets of about £50m and “a very healthy balance sheet, so we can attract leverage”, Bristow points out.
A lot of people think worldwide telecommunications is via satellite, “but 96%+ of the world’s traffic is by submarine cable and the cost of investing in those cables and operating them is the same irrespective of the traffic that is on them”, he adds.
Attractive add-on services are growing. u-mee offers free voice calls over the Internet (VOIP) as part of, or in addition to, users’ Gibtel landline number. Normal fixed line ‘phone use has declined for years throughout the world – however, at £7.2m it still accounts for 17% of Gibtel revenue after falling 5% in 2014. “One reason is that people are using more data to communicate [on computers and
mobile], and second, there are disruptive technologies where people are able to use voice services and not having to pay for it [Skype, etc]”, he explained.
TV is an attractive, potentially profitable, but contentious area. UK terrestrial channels – BBC, ITV, Channel 4, etc – plus Sky, all refuse to transmit outside of the UK under EU agreements, yet with availability of fast internet
connections IPTV makes viewing possible throughout the world.
A J Sheriff Electrical, which as Gibsat has been providing television services through a UK supplier to around 85% of The Rock using cable for 27 years, began its GibFibreSpeed to home internet & TV service 6 months ago. “We tried to get contracts with the channels, but they said ‘Gib is not part of the UK, nor part of Spain, it’s nowhere’ – the revenue is too little for them to bother about”, explains Andrew Sheriff. The company’s Internet offering ranges from 10mps for £10pm to 200mps costing £65.
Most TV 'provided legally'
Isola says u-mee is now offering HD quality access to more than 120 TV channels, including from all UK broadcasters, with catch-up, rewind and recording as part of its fast broadband account.
“We are bringing most of the TV channels down from the UK by fibre optic cable... we are not capturing channels over the internet,” he declares and insists that “most of our channels are provided legally”, with efforts being made to legally tie up sim- ilarly other “relevant channels”. The u-mee offer for 50mbs Internet connection, VOIP and TV, is £39pm.
His u-mee diversification “will either have been a big success or a flop”, but he hopes the new residential and SMB market offering will in future account for “30-35% maybe of profitability – but I could be wrong here”.
Gibtel has flirted with TV-down-the-
Andrew Sheriff supplying The Rock with TV for 27 years.
u-mee fibre to homes with TV “a risky investment’, says chief executive, Lawrence Isola
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Gibraltar International
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