The phone giant blames its expanding expenses largely on the rising cellular market, and more specifically the 100 per cent growth it says it has detected in local mobile phone usage over a one-year period.

More Jamaicans are talking, but they are not necessarily talking through Cable and Wireless' phones. Cellular usage in Jamaica jumped "from approximately 300,000 last year April to 600,000 this April," said C&WJ, noting that it seemed to be "a continuing trend."

Within the three-month period ending June 30, C&WJ has spent $1.34 billion to pay for calls terminating on other phone companies systems. Comparatively, its bill for the entire twelve months of the 2001 financial year was $120 million lower at $1.22 billion.

The current figure is even more stark in a quarter to quarter comparison. In April to June 2001, the company had paid out $500 million to local and overseas providers; in 2002, the figure for the quarter had almost tripled to $1.34 billion.

Along with C&WJ, two other companies, Digicel and Centennial, offer cellular service in Jamaica.

"In the case of Digicel, for every minute that one of our fixed line customers talks to a Digicel mobile, our customer is billed at the rate set by Digicel of $12 per minute. CW&J retains on average, $1.50 of that amount," said the phone company in written responses to Wednesday Business queries.

"As liberalisation continues we expect that there will be some more competition and we have already developed and are executing strategies to deal with the still emerging environment," the company said.

In the meantime, its revenues are up but profits are down.

The telecoms company posted earnings of $6.63 billion over the period April to June 2002 recording an improved gross revenue intake of more than a billion dollars when compared to year prior results for the same period.

But operating expenses of just over $4 billion within the group, plus its obligations to other phone carriers have eroded much of the inflows, leaving the company with reduced after tax profits of $728 million (June 2001: $816 million), an $88 million or 12 per cent decline. The figures are unaudited. In its notes to the financials, however, C&WJ sought to assure shareholders that the current results were not necessarily reflective of the year's performance.

"There are significant seasonal variations in the group's activities, therefore the results for any period are not necessarily indicative of the final results for the whole year," the telecoms giant said.

"Profits are down because we have been increasing marketing and sales expenses and secondly due to financing costs related to devaluation losses on overseas loans," it told Wednesday Business. It also claimed that continued bypass activity was affecting earnings.

Falling international rates for overseas calls terminating on Cable and Wireless' system sees the company pushing ahead with its diversification strategy - with its range of products now including fixed line, cellular, data and Internet services.

International calls in and out of Jamaica are to be liberalised in March 2003.

http://www.jamaica-gleaner.com/gleaner/20021002/business/business4.html