Hurricane Beryl triggered insurance payouts for Flow’s operations in Jamaica and select islands, equating to an estimated US$44 million, the parent company of the regional telecommunications services provider has said.
“The overall impact is manageable,” said Liberty Latin America CEO Balan Nair, regarding the insurance coverage.
Liberty Latin America owns Flow through subsidiary Cable & Wireless Communications Plc, otherwise referred to as C&W Caribbean.
In July, the hurricane caused damage to Jamaica, Grenada, St Vincent and Grenadines, markets in which Flow operates, said Nair.
“In our impacted markets, over 90 per cent of fixed and mobile coverage is online and continues to grow,” he said about the recovery.
Hurricane Beryl triggered the company’s “weather derivatives” and it “expects to receive net third-party proceeds of approximately US$44 million that will be reflected as a derivative gain” in its financial statements, Liberty said in its newly released second-quarter earnings report. The figure equates to around $7 billion in local currency.
“We are still in the process of assessing the impact of Hurricane Beryl on our homes … and subscribers,” the company said.
The weather derivative reflects a quantum related to the severity of the Category 5 hurricane, rather than proof of damage.
Jamaica, which houses the bulk of Flow’s regional telecoms assets, accounts for 1.2 million mobile subscribers, representing 60 per cent of the network’s 1.95 million subscribers across the Caribbean.
“In connection with Hurricane Beryl, we expect to experience adverse subscriber and financial impacts during the remainder of 2024,” Liberty said.
C&W Caribbean generated US$733 million in revenue over six months, from January to June, reflecting a four per cent improvement at the top line.
The company estimates that its revenue and OIBDA, that is, adjusted operating income before depreciation and amortisation, will be negatively impacted by between US$10 million and US$20 million for the rest of the year. This financial strain will be most pronounced during the third quarter, and depends largely on how quickly power is restored to the affected areas.
Separately, the company expects to incur capital costs for property and equipment of about US$10 million to US$20 million. These costs are necessary to “replace infrastructure and equipment that has been damaged beyond repair or to enhance network resiliency” for future natural disasters, it said. The extent of the damage underscores the vulnerability of telecoms infrastructure in regions prone to hurricanes and other extreme weather events.
The derivative payout is expected to happen quicker than other forms of insurance, thereby facilitating a speedier recovery. (Jamaica Gleaner)
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