Historic loss for TSTT while Jamaica and Barbados do well

PORT-OF-SPAIN, Trinidad, May 25, 2007 – Telecommunications Services of Trinidad and Tobago Limited (TSTT) is this morning reporting a possible historic post-tax operating loss for the financial year ending March 31, 2007.

The performance is in stark contrast to other telecommunication companies owned by Cable and Wireless in the Caribbean. Cable & Wireless PLC which owns 49 per cent of TSTT reported in its financial statement a healthy balance sheet with profits more than doubling. This was due in part to new international business which was largely fuelled by performance in other Caribbean islands with Jamaica and Barbados leading the way.

The TSTT loss is estimated at TT$122 million (approximately US$20 million and 10 million pounds sterling) as compared to a post-tax profit of TT$261 million for 2005-2006. Included was TT$187 million (approximately US$31 million and 15.6 million pounds) in impairment of assets and a write-off of TT$100 million (approximately US$16.6 million and 8.3 million pounds) due to “weak financial and operational controls  that have since been rectified”, in the areas of international roaming fraud, prepaid fraud, and bad debt, resulted in losses of nearly TT$100 million.

“While I have been here only a short time, I can speak for all TSTT employees when I say that we are not satisfied with these results. The difficulties that we are facing are no more than to be expected in the early stages of a liberalizing market,” said newly appointed Chief Executive Officer Roberto Peón.

“We are determined to get the company back on track to better financial health in the long term. We are encouraged by the fact that unlike the performance of other competitors in the market, the company maintains a very strong balance sheet. Our ability to transform and compete successfully is in the best interest of all our stakeholders and indeed all of Trinidad and Tobago,” he added.

A major portion of this decline in revenue can be attributed to price erosion in the international long distance market where revenues declined from TT$379 million in 2005-2006 to TT$290 million this year, the company said while at the same time noting a major feat in fending off competition by aggressive mobile service newcomer Digicel. It cost the company TT$311 million to pull out the stops on a major advertising blitz and other “customer acquisition” marketing strategies.

“Unlike incumbent operators in most newly-liberalized markets, the company retained significant leadership in the mobile market by nearly doubling its mobile customer base to over one million customers. However with its aggressive response to competition, the company incurred a substantial increase in operating costs, reflected in its current financial results,” the company stated.

Cable & Wireless PLC, a major shareholder in TSTT, produced a profitable balance sheet yesterday, blemished by two losses from Bahrain and Trinidad and Tobago.

“Our share of post-tax profits of joint ventures and associates decreased by 34 million pound to 18 million pound following the disposal of Batelco, our associate in Bahrain, and the poor performance of TSTT, our joint venture in Trinidad and Tobago,” Cable and Wireless noted in its financial statement for the year ending March 31, 2007.

Cable & Wireless PLC profits more than doubled as it picked up new international business and cut costs in its domestic operations to record net income of 174 million pounds up from 76 million pounds in the previous year. Total revenue rose 3.7 per cent to 3.35 billion pounds.

The Caribbean contributed significantly to the new international business of Britain second largest telecommunications provider.

In broadband, customers increased by 39 per cent to over 400,000 customers in 2006/07.

“We are the market leader in all 26 of our broadband markets. Our subsidiaries’ broadband customers increased by 37 per cent in 2006/07 to 378,000 customers. This was primarily driven by strong growth across the Caribbean – Jamaica almost doubled its customer base to 79,000 customers by offering higher speeds for similar prices. Barbados increased numbers by 75 per cent to 28,000 as a result of promotional offers, such as the offer of a free modem and installation. East Caribbean customer numbers grew by 42 per cent driven by revamped pricing plans, further rollout of Netspeak (our VoIP product) and promotional offers,” according to the Chairman Richard Lapthorne.

In the mobile market, Jamaica and Barbados increased by 24 per cent each followed by the Eastern Caribbean by 23 per cent and the Northern Caribbean by 14 per cent.

At the same time, Cable & Wireless loss ground in the fixed line market. Its sales declined by 10 per cent in Barbados and 6 per cent in the Eastern Caribbean. In Jamaica there were 7,000 (2 per cent) new installations and 1,000 (1 per cent) in the Northern Caribbean

“It’s been a good year. The success of the structural changes we made a year ago is there for all to see. International has performed well delivering growth in customers and revenue and, as a result, improved EBITDA. We have made a very encouraging start to the Europe, Asia & US turnaround and we now have sufficient visibility to believe that we’ll deliver on our ambitious targets. All of which reinforces our confidence in our future prospects which is reflected in the dividend. I’m delighted to announce that we’re recommending a 34 per cent increase in the final dividend to 4.15 pence, which with the interim of 1.7 pence gives a full year dividend of 5.85 pence, an increase of 30 per cent  over 2005/06,” said Lapthorne.