“Non-permission by Govt. halted company’s expansion”

Aug 18, 2011 News

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GT&T breaks silence on monopoly…

– invested $3.2B annually over 20 years

By Leonard Gildarie

As government moves legislation through parliament to open the telecommunications market, the Guyana Telephone and Telegraph Company (GT&T) has broken its silence, insisting that its contribution to the country over the last 20 years has been immense but expansion plans were stymied by lack of Government’s permission.
This was despite government’s statement that the company has not been expanding, a senior official has said.
Regarding the legislation, GT&T said two Thursdays ago they were informed that the bills were to be tabled in the National Assembly that afternoon.
“We were given a few days last year to make our input into the draft legislations. We are speaking about hundreds of pages of significant and complex clauses that needed time to be studied. Yes, we attempted to add our input,” said Chief Executive Officer, Yog Mahadeo, earlier this week during an exclusive interview with Kaieteur News.

The executive noted that even though the legislation is being considered in a Special Select Committee of the National Assembly, there is still time for talks. When asked about such discussions, the CEO said that “we have so far not spoken publicly because we were under the impression that confidential negotiations were ongoing with the Government”.

HELPLESS
“GT&T, as we have said, remains committed to Guyana. We are open to speaking with the stakeholders on the way forward for the industry. GT&T has always openly said that it was willing to negotiate its exclusive licence in return for operating in a level playing field. Reviewing the current legislation, GT&T is being asked to continue operating with its hands basically tied behind its back.”
When the new laws are enacted, GT&T’s licence with its exclusive clauses will be no more, and other companies will be able to offer landlines, international calls and broadband services.
In its operating framework, according to Mahadeo, almost 60% of its cash payouts annually went to government, while the dividends and fees made to its US-parent company, Atlantic Tele-Networks (ATN), were plugged back into Guyana.
Over the last 20 years, government would have been paid $53.8B in taxes and dividends while $35.8B went to ATN.
Government has tabled legislation that effectively will allow foreign and local investors to conduct the same business as GT&T. The Bills could be passed in early September.
Under its licence, GT&T is the only telecommunication company in Guyana authorized to conduct overseas calls and operate landlines.

PAPER MONOPOLY
“We have been saying that the monopoly is only a monopoly on paper. Everybody knows that that illegal bypass has been stealing our revenues from international calls, the main source of our income. And, remember, whatever we earn from these overseas calls, 50% goes to the government of Guyana and the rest goes into our operations, including subsidising local calls. In addition, everyone knows that over the past couple years we have lowered our rates to USA and Canada, where today, it is lower than anywhere else in the Caribbean… even lower than our competitor itself is selling in Trinidad and Jamaica.”
Since the tabling of the legislation, GT&T has largely been silent on the implications.
“The fact of the matter is Guyana has been a big winner with the presence of GT&T. ATN has been plugging money into GT&T. On average, we have been investing over $3.2B annually in Guyana for the last twenty years.”
In total, GT&T since entering Guyana in the early 1990s has invested over US$350M, Mahadeo emphasised. “This is evidence of our serious care for the people of Guyana.”
Regarding licencing fees, he noted that between 1999 and 2011, over $2.1B was paid to government.
“This is excluding fees paid to the regulatory agency, the Public Utilities Commission, which was $25M annually and now $50 million annually.”

NEGOTIATIONS
Regarding GT&T’s position on the breaking of the exclusivity, Mahadeo made it clear that “from day one”, his company was open to negotiating and putting in its place regulations which would allow for a level playing field.”
“We said this last year December. And it is on record in the newspapers, GT&T as a matter of fact offered government the opportunities to negotiate the exclusivity clauses of our contract. We remain open to negotiations, but we cannot negotiate with ourself.”
Mahadeo admitted that there may have been some unhappiness by customers over a perception that the company is moving slowly on a number of its projects, including the rolling out its E-magine broadband services.
“For two years now, we have applied for frequency allocation so our broadband services could have expanded rapidly across the country. As you are aware, we have invested over US$30M in a fibre optic cable. Some areas, especially in the hinterland, may just not be economically feasible. We needed that frequency permission to have that expansion. None was given.”
According to Mahadeo, that effectively has halted GT&T’s expansions plans across the country.
“We have had, as you know, free internet for phones…the only company to do this and people love that. We have applied to make it more effective by adding more frequency channels. No permission.”
Even against this background, he said, GT&T has continued paying “hundreds of millions” in frequency fees over the years.
“You have to also look at the bigger picture. GT&T has been heavily investing in cricket, culture, community work, sports…you name it. We have been a good corporate citizen.”
Regarding its rates, the CEO said it has, “throughout the period, consistently managed to keep its rates low and affordable. While our current dollar talk prevails, our competitor has increased their mobile rate by four times. This was while our landline rates have not risen since 2002, and in the last two years, our international outbound rates to USA and Canada are among the lowest in the Caribbean.”
Mahadeo made it clear that while the landline segment is operating at a loss, the international exclusivity was what subsidised that service. He gave the example of Guyana having the lowest rates on landlines compared to other countries, with local landline rates being “as low as under one-eighth of a US cent per minute”.
The illegal bypass to which the Government has turned a blind eye has been costing the company over US$10 million per year, the CEO pointed out.
“And even though we have not gotten the necessary elements from the Government for expansion of the E-magine service, we have reduced our prices in the non-E-magine areas.”

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