Phone company says inbound traffic revenues down 53%
Stabroek News
August 26, 2002
The local phone company says it has only earned a nine per cent rate of return on its investment up to the end of June and its inbound traffic revenues are down by 53%.
The loss from the inbound international traffic is as a result of the lowered settlement rate for calls from the US compared to the first half of 2001. The rate fell from US$0.85 to US$0.23 as of January 1 this year. Under its contract, the Guyana Telephone and Telegraph Company (GT&T) is entitled to a 15% rate of return.
The firm also lost US$5M in outbound traffic revenues against the first half of 2001.
In figures released to the US Securities and Exchange Commission by its parent company, Atlantic Tele Network (ATN) earlier this month, ATN said that audiotext revenue for GT&T has also fallen from the US$1.6M for the first half of 2001 to $714,000 for the same period this year. Audiotext was a few years ago the largest income earner for the company.
The filing as reported by BNamericas.com, a wire news agency, said ATN also benefited from the growth in GT&T's cellular operation with an increase of US$344,000 in revenue for the second quarter of this year, a six per cent hike over the first quarter. The statement noted that cellular subscribers for GT&T have increased from 18,412 in June 2001 to 57,048 at the end of June this year - an increase of over 200%. Wireline subscribers, on the other hand, only increased by 9% or from 75,136 to 82,043 in the same period.
In the second quarter of this year, the growth in cellular subscribers for GT&T was 11% but this increase in revenue was offset by ATN's higher expenses associated with the expansion and development of Atlantic TeleCentre, ATN's web-based call centre in Guyana as well as expenses to convert ATN's wireless TV operations in the Virgin Islands from analog to digital.
Cornelius Prior, ATN's and the Guyana Telephone and Telegraph Company's chairman said in the filing that while the troubled Worldcom/MCI was a leading carrier for GT&T, ATN did not expect any service or financial disruption as a result of the problems that company faced. GT&T, Prior said, had relationships with multiple carriers including AT&T and Sprint.
ATN was also affected by the scandal which hit accounting firm Arthur Andersen, the company accountants. The company has named PriceWaterhouse Coopers to replace Andersen which was embroiled in the Enron scandal in the US and faces the threat of closure.
ATN has reported net earnings of US$4.2M for the first half of this year, a decrease over the same period last year. Second quarter earnings this year were better than the first quarter by US$200,000 as a result of a US$1 million increase in income from telephone operations. However, the second quarter net income was 29% less than the same period last year.
The subsidiaries of ATN are GT&T, Atlantic Tele-Centre and Choice Communications, the largest internet service provider and wireless TV provider in the US Virgin Islands. ATN also has a 44% stake in Bermuda Digital Communication Limited, the non-wire line cellular operator.
ATN's operation saw a 21% increase in minutes of international traffic, resulting in the 19% rise in income from telephone operations.
ATN's telephone operating revenues for the second quarter of this year were US$16.5M, compared with $21.4M for the same period last year, a decrease of 23%.
The company's regular inbound international traffic revenues decreased by US$6.6M or 53% and this was attributed mainly to the lowered settlement rate for calls from the US to Guyana but was partly offset by an increase in local revenue of US$2.1M or 48% due to increased cellular and wireline subscribes.
Total telephone operating expenses for ATN were $10.4M for the second quarter compared with $12.7M for the same period in the previous year. It was a result of a reduction in outbound international traffic expense as the settlement rate was reduced.
In the statement, Prior expressed regret at not being able to obtain an increase in local wireline rates in Guyana to offset the decrease in revenue from US traffic.