With cable companies under the gun to achieve free cash flow as quickly as possible, a Denver-based cable services firm has developed a series of software and asset management products aimed at making the road toward reaching that goal a little easier.
Free cash flow is cash flow after interest payments and capital expenditures are made, a metric that many analysts consider a better indicator of financial health.
In the suite
Broadband Services Inc., formed by cable pioneer and former Tele-Communications Inc. chief operating officer J.C. Sparkman in 1999, is basically switching its focus toward products aimed at helping operators achieve free cash flow.
The suite of products is aimed at asset management, supply-chain management and inventory control. Longer-term results include improved operating efficiencies.
BSI chief technology officer Andy Paff said the company is targeting the product at larger cable operators and already counts Charter Communications Inc. as a customer. BSI is in discussions with all the major MSOs, he added.
Depending on the operator's capital budget, the BSI products could increase inventory turns from three times to 12 times a year, Paff added, which means that instead of turning over inventory every four months, the operator would turn over inventory every month. That could result in a savings of as much as $100 million that would fall to the free-cash bottom line.
Paff said the BSI approach is like the "just-in-time" inventory approach of manufacturing businesses. And as cable operators' capital budgets shift focus from plant rebuilds to the buying of equipment like set-top boxes, Paff added, efficiently managing that inventory is more important than ever.
"From an operator's standpoint, it's an issue of a cable modem you bought for $300 sitting on a shelf and it's now worth $50," Paff said. "You want to be no more than 30 days from a revenue event when you buy one of those things."