Sale
The Guyana Telephone and Telegraph Company, generally referred to as GT&T, was formed in 1991 after the Government of Guyana under the late President Desmond Hoyte sold an 80 per cent share of the state-owned entity Guyana Telecommunications Corporation (GTC) to Atlantic Tele-Network, or ATN. The remaining shares were retained by the Guyana government. The sale gave ATN, and by inference GT&T, exclusive rights to provide domestic wireline local and long distance service in Guyana for 20 years. It also gave it the exclusive right to sell, lease, or service various kinds of telecommunications equipment. At the same time, GT&T received a non-exclusive license to provide cellular radio telephone service in the country for an equal length of time.
Shadow of doubt
However one might feel about the performance of GT&T, a shadow of doubt has been cast over the organization’s future ownership, with its declining influence within ATN, its entangled and protracted legal battles with the Guyana government, the rough competitive wireless environment around it, and the notable shift in strategic focus of its parent company, ATN. With GT&T contributing less than 14 per cent of the revenue of ATN last year, in contrast to 85 per cent six years ago, it has fallen from the commanding heights of the organization to a position of marginal influence.
Insisting
Guyanese might recall that, during the budget presentation this year, the administration excluded the telephone companies from enjoying the proposed lower company and corporate tax rates on their profits. For GT&T, this announcement came during a time when it was insisting that the administration recognize its right to be able to renew its exclusive license at its discretion as per the contract it signed in the early nineties and after refusing to buy the administration’s share of the company. Given all these developments swirling around GT&T, it is reasonable to wonder if ATN might give up the goose that laid the golden egg and hand GT&T back to the Guyana government like Guyana Power and Light did in 2003.
Vulnerable
This likelihood is not a thought that might sit well with most Guyanese given the improved quality of the telephone service in the country today compared to where it was 20 years ago. But this matter is not entirely in the hands of Guyanese either, if only because any decision of the return of GT&T is largely the prerogative of its parent, ATN. ATN is not afraid to let go of any enterprise whose contribution becomes a threat to its bottom line. It readily folded up the operations of ATN Haiti and Transnet, two former subsidiaries, when their revenues became immaterial to its consolidated income. A similar fate befell Atlantic Tele-Center (ATC), a call centre, that was located in Beterverwagting on the East Coast of Demerara and that was adversely affected by the floods of 2005 and 2006. Those who are familiar with ATN know that with revenues under US$1 billion, it is a small company playing in the big leagues and is vulnerable to the manoeuvres of its outsized competitors. Guyanese should realize therefore that ATN would move quickly to protect itself wherever and whenever it sees a threat to its existence.
Upbringing
Thus, it is to ATN one must look to understand the upbringing of GT&T in the last 20 years and what might be putting it at risk of abandonment by its parent now. Gaining an understanding of the precarious position of GT&T in the family of businesses that make up ATN also requires knowledge of the composition and evolution of ATN and some of the challenges that it currently faces. Through these lens, Guyanese would get to see the predicament in which GT&T finds itself and the efforts of its majority owner to protect its investment from the regulatory and competitive upheavals of the telecommunications industry.
Family network
ATN is a holding company that was incorporated in the state of Delaware in 1987. As of March 1, 2011, ATN had 15,383,181 shares of common stock outstanding. It possessed several subsidiaries over the years, but currently has five of them which it manages from its headquarters in Salem, Massachusetts in the USA. In addition to GT&T, the family network of ATN includes Bermuda Digital Communications (BDC), Choice Communications (CC), Commnet Wireless, LLC and Sovernet. Each company has its own role to play in providing wireless services, local telephone and data services, international long distance calls and wireless TV and data services which are provided in differing combinations in three markets: the Caribbean, Guyana, and the United States of America.
BDC, along with Choice Communications, primarily serves the Caribbean market. BDC provides wireless voice and data services to retail and business customers in Bermuda and wireless services to customers in the Turks and Caicos. Choice provides fixed wireless broadband data services and dial-up internet services to retail and business customers in the U.S. Virgin Islands. Commnet and Sovernet serve the mainland US market. Commnet provides wireless voice and data communications roaming services to rural parts of the Midwest and Southwest United States while Sovernet provides facilities-based integrated voice and broadband data communications services mainly in the northeastern USA.
For a while GT&T had other siblings such as Atlantic Tele-Center (ATC). The call-centre which was expected to employ a maximum staff of 500 never got up to the anticipated level of operation and was jettisoned a few years after the floods. Other activities in Haiti and the US Virgin Islands were also discontinued by ATN.
Scale of operations
GT&T has been a good child of ATN through the years. It provided ATN with much of the financial fortitude and strength that it needed over the last 20 years. Though the scale of its operations has grown, GT&T continues to provide three principal services to Guyanese residents and businesses. It provides wireless communications, international long distance services and local telephone services. When it started out in 1991, GT&T had about 13,000 fixed access lines that it had inherited from its precursor, GTC. At the time, it also provided a handful of consumers with mobile cellular service that reached a maximum radius of 30 miles from Georgetown.
With the aid of its parent, GT&T invested nearly US$344 million in the telecommunications infrastructure of Guyana between 1991 and 2010. As a consequence of this investment, Guyana has approximately 150,000 access lines in service, 10 times more than when GT&T started operations 20 years ago. The demand for mobile services has also grown substantially since its inception. In a report accepted two weeks ago by the Securities and Exchange Commission (SEC), a watchdog institution for companies whose stocks are traded on the US Stock exchanges, GT&T reportedly had about 305,000 wireless subscribers in Guyana as of December last year. This translates into an estimated 40 per cent of the consumer market in Guyana.
Flagship enterprise
In addition, for nearly 13 of its 20 years, GT&T provided almost all of the income of ATN. As late as 2004, just seven years ago, GT&T was responsible for 94 per cent of the revenue earned by its parent company ATN. Even though that figure started to decline by 2005, GT&T continued to provide the majority of income for ATN up until 2008 when the contribution stood at 47 per cent. Thus, for the better part of 17 years, GT&T remained the flagship enterprise of ATN.
(To be continued)
