GTT ties telecoms liberalization to higher landline rates

Feb 05, 2017 News

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US-owned Guyana Telephone and Telegraph Company (GTT) has again signaled high interest in its landline rates being increased before the telecoms market is opened to new players.

On Friday evening addressing media workers at the now annual social event, the company made it clear that it is banking heavily on a favorable decision by authorities expected sometime in the near future.
Chief Executive Officer (CEO), Justin Nedd, said that he believes that the company should have its land line rates reviewed prior to liberalization.
“We continue to provide the Public Utilities Commission (PUC) the requisite information and support to enable them to make an informed decision.”
PUC is the authority that regulates utilities in the country.
GTT was since last year locked in a battle with a consumer body over an application made to the PUC to increase the rates.
Following an application – “Grounds for a review of Order No1/2015”- made on November 17 by GTT to the regulator – the Public Utilities Commission (PUC), the Guyana Consumers Association (GCA) released its submission which accuses the telephone company of deliberately hiding its profits and refusing to expand its landline service in order to capitalise and focus on the lucrative mobile services market.
GTT is arguing that it is taking heavy losses on the landline. But the consumer association has countered by saying that the line is being subsidized as it is used to carry internet to homes and therefore should be reimbursed.
The consumer body wanted government to order a forensic audit into the operations of GTT to determine how much profits exactly the company has been making.
The concerns of GCA were raised in the memorandum dated December 9 and which was sent to the PUC.
The memo was sent by GCA’s Secretary, J. Deonauth to PUC’s Chairman, Justice (Retd.) Prem Persaud.
According to the association, if GTT had “truthfully” wished to reduce international rates, it would have modernized its technology and would have done what efficient telephone companies worldwide have done when encountering competition from similar international rate reduction – it would have reduced its international rates.

”But GTT has no intention of reducing international rates. They are intent that the consumer must subsidise them both directly or indirectly, an attitude deriving from being a monopoly.”
According to GCA in its memo, it has reservations also about the integrity of the Commission to evenhandedly dispense justice to the consumers and “the Commission needs to publicly address this issue”.
GCA said that the regulator should dismiss the telephone’s company claim for special profits for its landline services.
“Our reason for this position is that by their contract with the Government of Guyana, profits of the company are calculated on the basis of assets only. They could make a minimum profit of 15% of assets plus “Advisory Fee” of six per cent of gross takings making a total profit of nearly 30%. No profits are calculated on segments. To attempt to calculate profits on segments is a surreptitious attempt by GTT to vary their contract.”
GCA also accused GTT of deliberately practising questionable accounting by making Guyanese consumers pay 15% return on its depreciated landline assets “allowing the company to harvest super profits on the landline. These super profits are not credited to the landline”.
GCA told PUC, the fibre optic and the copper lines belonging to the landline have been used and are being used to transmit mobile and internet traffic, which in 2015 was estimated to be earning US$2 million per annum. “These revenues, which are concealed profits, must be credited to the landline,” the memo urged.
GCA said the best way of “knowing the truth and giving the PUC evidence on which it could act” is to have the company disaggregate and segmentalise its accounts as other big companies in Guyana do.
”The PUC cannot act on GTT demands except that the accounts are disaggregated and segmented so as to give the PUC a rational base on which to make their deliberations. Ultimately the PUC should consider employing their own independent consultants that can assess GTT numbers and to see whether they can arrive at the same conclusions as Analysys Mason.”
GCA said that the telephone company’s recent demand for increased rates is spurious.
”For 26 years the Guyanese consumers have funded all investments by GTT within and outside of Guyana. This funding is the formidable basis of a company that uses internal interest-free funds to expand and then claim increased rates from double dipping,” the memo to PUC said.
GCA said that while the regulator has never approved rates increases for the company, the fact that it has been gaining 10,000 customers per year ought to have provided increased revenues with straight-line cost.
Government has passed new laws to break GTT’s monopoly on landline and international calls.
Negotiations started late last year week with the principals of the US-owned company and officials here.
When negotiations are complete with GTT, Government will be able to issue telecoms licences for company offering faster internet, mobile, landline, and even internet television and more fibre optic cables.

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