CEO of Telecom­mu­ni­ca­tions Ser­vices of Trinidad and To­ba­go (TSTT), Lisa Agard, is con­fi­dent that the ma­jor­i­ty state-owned com­pa­ny’s $94.5 mil­lion (US$14 mil­lion) af­ter-tax prof­it for its fi­nan­cial year end­ing March 31, 2023 will con­tin­ue in the fu­ture.

In the five years be­fore its 2023 fi­nan­cial year, TSTT gen­er­at­ed af­ter-tax loss­es to­tal­ing $1.76 bil­lion (US$261 mil­lion), which were re­versed for the first time since its 2017 fi­nan­cial year.

In an in­ter­view at TSTT House on In­de­pen­dence Square last Sat­ur­day, Agard paused be­fore an­swer­ing a ques­tion on whether the ma­jor­i­ty state-owned com­pa­ny had put its loss-mak­ing days be­hind it.

“This man­age­ment is com­mit­ted to en­sur­ing that we do not go back to the days of loss­es,” she said, plac­ing some em­pha­sis on the word “this” to make the point that she can­not speak on what is to come.

The TSTT CEO said the com­pa­ny in­tends to main­tain its prof­itabil­i­ty by a mod­est growth in its rev­enue and by con­tin­u­ing strin­gent cost man­age­ment.

The growth in rev­enue is ex­pect­ed to re­sult from in­vest­ments to com­pa­ny is mak­ing in fi­bre de­ploy­ment, mo­bile LTE, at its da­ta cen­tre in Ma­coya and in fin­tech and oth­er ser­vices.

“We ex­pect those in­vest­ments to yield a re­turn for us which will re­sult in a mod­est in­crease in rev­enue and al­so that is in keep­ing with the eco­nom­ic growth pro­ject­ed for the coun­try,” said Agard.

TSTT re­duced its staff num­bers by about 460 as at Ju­ly 2022.

Agard said that ul­ti­mate­ly that the em­ploy­ee sep­a­ra­tion ex­er­cise will re­sult in $180 mil­lion in op­er­at­ing ex­pen­di­ture sav­ings.

“This will be the full year that we will see the full im­pact of the staff re­duc­tion and ul­ti­mate­ly––be­cause we still have some re­tirees who are leav­ing the or­gan­i­sa­tion––will yield $180 mil­lion in an­nu­al op­er­at­ing ex­pen­di­ture sav­ings.”

Asked whether TSTT would have sur­vived with­out the 2022 re­struc­tur­ing ex­er­cise, Agard said: “It would not have, based on the sig­nals from our ex­ter­nal au­di­tors.”

She agreed that the de­ci­sions tak­en by the board and man­age­ment of TSTT to re­struc­ture the com­pa­ny’s em­ploy­ment saved it from fail­ure and col­lapse.

“That’s cor­rect. That would be a very ac­cu­rate de­scrip­tion.”

But she said TSTT’s cost man­age­ment was not on­ly a func­tion of the re­struc­tur­ing of its staff com­ple­ment in 2022.

“I want to em­pha­size that we had very strin­gent cost con­tain­ment in oth­er ar­eas of the com­pa­ny, which on an an­nu­al ba­sis re­sult­ed in op­er­at­ing ex­pen­di­ture sav­ings of $160 mil­lion a year, which we in­cor­po­rat­ed in­to the an­nu­al op­er­at­ing plan this year. We ex­pect to yield more op­er­at­ing ex­pen­di­ture sav­ings as we im­prove the ef­fi­cien­cy of our op­er­a­tions,” Agard said.

The $160 mil­lion in sav­ings on its op­er­a­tions came main­ly from what TSTT calls main­te­nance, which in­cludes costs as­so­ci­at­ed with its build­ings, tele­coms equip­ment and plant, but al­so ad­ver­tis­ing and mar­ket­ing.

Cut­ting the com­pa­ny’s cost pro­file in­clud­ed look­ing crit­i­cal­ly and minute­ly at every as­pect of its op­er­a­tions, in­clud­ing tak­ing a de­ci­sion not to cut the grass around its cell tow­ers dur­ing the dry sea­son.

TSTT’s op­er­at­ing ex­pen­di­ture in its fi­nan­cial year end­ing March 31, 2022 was $826 mil­lion. It ex­pects that to be re­duced sub­stan­tial­ly go­ing for­ward.

But cost re­duc­tion al­so in­clud­ed rene­go­ti­at­ing con­tracts with all ven­dors as con­tracts came to an end.

Agard agreed that blue skies were ahead for TSTT, but said it would not be an easy task.

“This is a very dy­nam­ic in­dus­try, it is an in­dus­try that is cap­i­tal in­ten­sive and it is an in­dus­try that is af­fect­ed by tech­no­log­i­cal changes. We do not know what is com­ing in terms of tech­no­log­i­cal ad­vances,” said Agard.

Div­i­dends and tax­es

While TSTT was prof­itable in its 2023 fi­nan­cial year, it will be some years be­fore it is al­lowed to pay div­i­dends.

At its vir­tu­al meet­ing with its bond­hold­ers last Fri­day, TSTT’s chief fi­nan­cial of­fi­cer, Shi­va Ram­nar­ine, cit­ed T&T’s Com­pa­nies Act to sup­port the point that firms that are in deficit are not al­lowed to pay div­i­dends.

On the is­sue of TSTT’s ac­cu­mu­lat­ed loss po­si­tion, Khaleeb Mo­hammed, se­nior man­ag­er in the com­pa­ny’s fi­nan­cial plan­ning and analy­sis de­part­ment, said: “We have ac­cum­mu­lat­ed loss­es up­wards of $2.3 bil­lion that we have sit­ting there. As we cal­cu­late each year what is the tax­able prof­it, that val­ue will start to de­crease. It is on­ly un­til that val­ue is com­plete­ly utilised, then what­ev­er prof­its come af­ter, we will pay tax­es on it.”

Asked to de­scribe what the ac­cum­mu­lat­ed loss­es mean for TSTT’s tax pay­ments in the fu­ture, Mo­hammed said: “In prac­ti­cal terms, it means that for a num­ber of years TSTT will not pay any cor­po­ra­tion tax. We would still have to pay Busi­ness Levy and the Green Fund Levy be­cause those are tied to rev­enue.”

The es­ti­mate is that the ac­cum­mu­lat­ed loss­es could take up to ten years to be elim­i­nat­ed. That as­sumes the tax rate will re­main the same, the TSTT ex­ec­u­tives said.

They al­so agree that if TSTT has ac­cum­mu­lat­ed loss­es on its bal­ance sheet that it can­not pay div­i­dends.

TSTT’s share­hold­ers are state fi­nan­cial hold­ing com­pa­ny Na­tion­al En­ter­pris­es Ltd, which owns 51 per cent. Lib­er­ty Latin Amer­i­ca, a US com­pa­ny, owns 49 per cent of TSTT through its ac­qui­si­tion of Ca­ble & Wire­less Com­mu­ni­ca­tions May 2016.