In most oth­er coun­tries, the ap­par­ent fi­nan­cial turn­around of the ma­jor­i­ty state-owned Telecom­mu­ni­ca­tions Ser­vices of Trinidad and To­ba­go (TSTT) would have been the sub­ject of se­ri­ous ex­am­i­na­tion by the ap­pro­pri­ate Joint Se­lect Com­mit­tee of Par­lia­ment, by the cham­bers of com­merce, the busi­ness schools and by fi­nan­cial jour­nal­ists.

The fact is that TSTT ex­pe­ri­enced a near-death sit­u­a­tion in its fi­nan­cial year end­ed March 31, 2021, when its au­di­tors, EY, is­sued the com­pa­ny with a ‘ma­te­r­i­al un­cer­tain­ty re­lat­ing to go­ing con­cern’ no­tice for that fi­nan­cial year.

I am not an ac­coun­tant, but an AC­CA doc­u­ment frames the is­sue of ‘ma­te­r­i­al un­cer­tain­ty re­lat­ing to go­ing con­cern’ as fol­lows: “A re­port­ing en­ti­ty that con­sid­ers the go­ing con­cern ba­sis of ac­count­ing to be ap­pro­pri­ate, but still has a ma­te­r­i­al un­cer­tain­ty present will have to make dis­clo­sure of the fact in the fi­nan­cial state­ments that there are un­cer­tain fu­ture trans­ac­tions/events that may re­sult in the en­ti­ty be­ing un­able to con­tin­ue in busi­ness in the fore­see­able fu­ture.”

I take that to mean that EY was warn­ing all of TSTT’s stake­hold­ers (in­clud­ing its em­ploy­ees, sup­pli­ers, cus­tomers and share­hold­ers, who are the State’s in­vest­ment hold­ing com­pa­ny, Na­tion­al En­ter­pris­es Ltd, and Ca­ble&Wire­less Caribbean) that the na­tion­al telecom­mu­ni­ca­tions com­pa­ny was at risk of “be­ing un­able to con­tin­ue in busi­ness in the fore­see­able fu­ture.”

In its no­tice of “ma­te­r­i­al un­cer­tain­ty re­lat­ing to go­ing con­cern,” EY not­ed that TSTT held out­stand­ing bor­row­ings (short-term and long-term) of $2.94 bil­lion (2020: $3.22 bil­lion) and its cur­rent li­a­bil­i­ties ex­ceed­ed cur­rent as­sets by $153.2 mil­lion (2020: $47.9 mil­lion).

As at March 31, 2021, TSTT’s ac­cu­mu­lat­ed deficit was $71.7 mil­lion (2020: $280.4 mil­lion), and to­tal eq­ui­ty stood at $505.2m. (2020: $296.6m).

“This may bring in­to ques­tion the en­ti­ty’s abil­i­ty to con­tin­ue in the fore­see­able fu­ture as a go­ing con­cern,” ac­cord­ing to the au­di­tor’s note, adding: “The group has be­gun to im­ple­ment strate­gies to im­prove liq­uid­i­ty and re­duce op­er­at­ing costs, and the di­rec­tors have main­tained the go­ing con­cern as­sump­tion in the prepa­ra­tion of these con­sol­i­dat­ed fi­nan­cial state­ments.

“This ba­sis of prepa­ra­tion pre­sumes that the group will re­alise its as­sets and dis­charge its li­a­bil­i­ties in the or­di­nary course of busi­ness. Giv­en the fi­nan­cial con­di­tion of the group, a ma­te­r­i­al un­cer­tain­ty ex­ists that may cast sig­nif­i­cant doubt on the abil­i­ty of the group to con­tin­ue as a go­ing con­cern. Our opin­ion is not qual­i­fied in re­la­tion to this mat­ter.”

It is very im­por­tant to note that the board of TSTT would have giv­en a com­mit­ment to the au­di­tors that the com­pa­ny would “im­prove liq­uid­i­ty and re­duce op­er­at­ing costs.”

In 2020, TSTT de­clared an af­ter-tax loss of $277.96 mil­lion and in 2021, the af­ter-tax loss was $93.62 mil­lion.

For the pe­ri­od end­ing March 31, 2021, the TSTT board was chaired by Sean Roach and com­prised Wen­dell Berkley, Vish­nu Dhan­paul (for­mer per­ma­nent sec­re­tary in the Min­istry of Fi­nance), Con­rad Enill (for­mer min­is­ter of en­er­gy), Kim­ber­ley Erri­ah-Ali (Re­pub­lic Bank’s group gen­er­al coun­sel and cor­po­rate sec­re­tary), An­nalean In­niss (at­tor­ney), In­grid Lash­ley (ac­coun­tant and chair of Na­tion­al En­ter­pris­es Ltd), Ian Nar­ine (who re­signed on Oc­to­ber 2, 2020) and Ju­dith So­bion.

The TSTT board for the fi­nan­cial year end­ed March 31, 2022, com­prised Sean Roach, chair­man, and di­rec­tors Wen­dell Berkley, Howard Dot­tin, An­nalean In­niss, In­grid Lash­ley and Ju­dith So­bion.

For the year end­ed March 31, 2022, EY again gave TSTT a no­tice sig­nalling that the com­pa­ny had ‘ma­te­r­i­al un­cer­tain­ty re­lat­ing to go­ing con­cern,’ as it held out­stand­ing bor­row­ings (short-term and long-term) of $3.29 bil­lion (2021: $2.94 bil­lion) and its cur­rent li­a­bil­i­ties ex­ceed­ed cur­rent as­sets by $54.4 mil­lion (2021: $153.1 mil­lion). As at March 31, 2022, the ac­cu­mu­lat­ed deficit was $343.4 mil­lion (2021: $71.7 mil­lion), and to­tal eq­ui­ty stood at $232.9 mil­lion. (2021: $505.2 mil­lion).

TSTT’s af­ter-tax loss for the pe­ri­od end­ing March 31, 2022 was $246.19 mil­lion.

Lisa Agard, was ap­point­ed as TSTT’s act­ing CEO on Sep­tem­ber 23, 2020, and was con­firmed in the job as the TSTT CEO on May 24, 2021. So she was ap­point­ed by the first board dur­ing the 2021 fi­nan­cial year and con­firmed by the sec­ond board dur­ing the 2022 fi­nan­cial year.

The TSTT board for the pe­ri­od end­ing March 31, 2023 was the same as the pri­or year, ex­cept for the ad­di­tion of Nicole De Fre­itas.

From an af­ter-tax loss of $246.19 mil­lion in its 2022 fi­nan­cial year, TSTT re­port­ed an af­ter-tax prof­it of $93.80 mil­lion for the fi­nan­cial year end­ed March 31, 2023.

Need­less to say there was no sign of a ‘ma­te­r­i­al un­cer­tain­ty re­lat­ing to go­ing con­cern’ in the 2023 au­dit.

One of the main rea­sons for the turn­around in the fi­nan­cial per­for­mance of TSTT was the re­trench­ment of the 468 em­ploy­ees of TSTT, which was an­nounced on May 31, 2022, just sev­en days af­ter she was con­firmed in the po­si­tion as the com­pa­ny’s CEO.

As Agard said in Ju­ly 2022 in a news­pa­per in­ter­view: “The de­ci­sion to re­struc­ture TSTT and re­trench em­ploy­ees was a dif­fi­cult but nec­es­sary ex­er­cise for the sur­vival of the com­pa­ny. It meant hav­ing to say farewell to peo­ple we care about and who have made in­valu­able con­tri­bu­tions to the com­pa­ny and its evo­lu­tion.

“As CEO, this as­pect of the ex­er­cise is not lost on me. In spite of the dif­fi­cult eco­nom­ic cir­cum­stances fac­ing the com­pa­ny, we of­fered com­pet­i­tive sev­er­ance pack­ages. Ad­di­tion­al­ly, coun­selling and fi­nan­cial ed­u­ca­tion ser­vices were avail­able to as­sist em­ploy­ees in deal­ing with the re­al­i­ties of re­trench­ment and mak­ing the best de­ci­sions about their fi­nan­cial fu­ture.”

Both the TSTT boards and Agard de­serve praise for their turn­around of the com­pa­ny. Agard did not do it alone as the man­date came from the TSTT boards to re­duce op­er­at­ing costs.

The ques­tion is with the same board but with dif­fer­ent man­age­ment, can TSTT sus­tain its prof­itabil­i­ty in its 2023 fi­nan­cial year to the 2024 fi­nan­cial year and be­yond?