The new chairman of TSTT, Emile Elias, says the company’s current board and its senior management is determined that the majority state-owned telecommunications provider will have a 4G LTE, despite reports that the Telecommunications Authority of T&T (TATT) has made a recommendation to its line minister that the two 4G licences be granted to Digicel and Flow.
“We will do everything in our power, politically and legally, to ensure that we get a 4G licence,” Elias said in his first interview as TSTT chairman on Saturday, at TSTT’s head office in downtown Port-of-Spain. In the interview, he also said all options are on the table with regard to TSTT with regard to a strategic partner, once the issue of the 49 per cent owned by minority shareholder, Cable & Wireless Communications (CWC), is clarified.
Knocking the desk in the chairman’s office for emphasis, Elias said: “We are not going into the future with foreign companies getting a licence from TATT and TSTT being left in the cold. Let me make just make that abundantly clear to everybody who reads your newspaper.”
TATT made the recommendations for the two 4G licences more than a year ago but neither its previous line minister, Rupert Griffith, nor the current one, Public Administration Minister Randall Mitchell, have acted on the advice.
Questioned on how his determination would be possible, given the recommendation made by TATT, Elias said: “We are determined that TSTT will have a 4G licence. I said that we would use everything in our power, politically and legally. Those are two words that send a very clear signal. If the process has to start over again, then let it start over again because the way it was done initially could not have been other than flawed if it resulted in a recommendation that the biggest provider in this country is not going to have a 4G licence.
“That is not going to happen under my watch, without a fight.”
Providing some context to Elias’ clarity and determination was the CEO of TSTT, Ronald Walcott, who was part of the interview in what was possibly his first professional interaction with the media since his appointment on September 18, 2014.
Walcott pointed out that TATT “in its wisdom” sought a third mobile operator in a market that has close to 150 per cent penetration and in which mobile rates are among the lowest in the region.
“We have seen in markets of this size, as in Jamaica, that third mobile operators have ended up not being viable,” said Walcott, adding: “If TATT is going to have three mobile operators, then the regulator has a right to provide spectrum that all three providers can participate in because what they are doing in essence, by only offering one licence, is destroying one of the three.”
Asked if it was technically possible for TATT to issue three 4G licences, Walcott said that the telecommunications regulator “would have to redefine its spectrum plan.”
Elias said the so-called third mobile operator, Flow, does not have a single mobile phone, tower or any of the infrastructure needed to take up the third licence.
The TSTT chairman said: “We are not going to sit idly by and go back to the days when natives were considered to be people wearing grass skirts. We are not pole renters. We are a high-technology company and we are going into the future with the confidence that the people of this country would be proud of us because we are determined to see the future with the technology the population demands.”
Elias ruled out partnering with Flow to provide the infrastructure for the 4G licence, if TSTT is not granted one. “If we have a 4G licence, there are all kinds of possibilities where technology companies can share,” citing the possibility that competing companies could share fibre optic cable or TSTT may allow another company to share its mobile poles.
“But we are not going to end up as pole renters while other companies have the spectrum and the high-speed mobile licence.”
Cost-cutting necessary
Elias said the new board will focus on cost-cutting exercises, other than reducing staff numbers in the first instance.
TSTT currently has about 2,300 employees and its new chairman said that he had been told that that number is about 1,000 in excess of its requirement.
He said the company will look at the possibility of reducing the outsourcing of services as well as redeploying workers into departments in which the company may be understaffed at this time, with the requisite training.
One of the policies that TSTT under Elias will not consider, though, is a voluntary separation programme, as he described the 2014 VSEP that the company implemented as “a disaster for TSTT because not only did it cost a fortune, but only the best people left and we lost many critical employees, which meant we had to go back and hire them on contract.”
He said the company is “very close” to reaching an amicable agreement with the representative trade unions on the middle three years of the nine years that were outstanding a year ago, referring to a possible settlement of the period 2011 to 2013, without having to resort to a third party. The 2008 to 2010 trimester was settled by an Industrial Court ruling, with the TSTT workers taking home back pay in the vicinity of $450 million. Elias said the 2011/2013 settlement is also likely to have a significant impact on the company’s cash flow, as he estimates it will be around $300 million.
“But then, we would need to have some serious conversations with the employee representatives—about the current three-year collective agreement period, which ends at the end of 2016—as to how we go forward,” said Elias. While emphasizing that all options were on the table, he said the new board’s priority now is to increase revenue with the right technology, enhanced customer service and better marketing.
Cash flow over profits
The new chairman said he is satisfied that the TSTT management has properly provisioned for the possible backpay for the 2011 to 2013 period, which will have an impact on the company’s cash resources.
Elias said: “The new board has agreed with me so far that I am less concerned about showing a profit than I am about preserving cash and recognizing where appropriate impairment charges are required, so that we preserve our ability to go into the capital market, if necessary to acquire new technology either from financial institutions or by way of vendor financing.”
He said TSTT is looking at how it can increase its positive cash flow and will look at the historical values it has on equipment, which may mean some impairment charges, which would be a non-cash item.
Hands in the pot
Among the cost-cutting exercises already implemented at TSTT is the elimination of all foreign travel at the company’s expense by TSTT directors.
“The last five years has seen an enormous amount of foreign travel by directors—Las Vegas, Barcelona, Mauritius. In the past, TSTT directors would go to any country that had any kind of exhibition or meeting at a cost of $5 million in five years,” said Elias.
“We are going to be hands-on directors—meeting once a month instead of once a quarter—and not a hands-in board,” the new TSTT chairman said. Asked what he meant by hands-in, Elias said: “Hands in the pot. This is not going to be a honeypot that everyone can dip their hands into.”
He also made it clear that he was not suggesting that some of the previous directors dipped their hands into the TSTT honeypot, he was saying it.
Said Elias: “I mean that I intend to pay extremely close attention to procurement and you can draw your own conclusion from that. One of my skills is procurement. None of the five directors have any interest in any company connected to TSTT. I am going to ensure that we have considerable savings from procurement.”
Competitive
On the issue of TSTT’s current competitive position, Walcott said TSTT has about 50 per cent of the mobile market, 92 per cent of the landline market, about 60 per cent of the security market, the same for broadband and ten per cent of the television market.
From an enterprise perspective, Walcott said that TSTT has most of the Government accounts and most of the big business accounts, holding 92 per cent of the enterprise market for telecommunications.
Asked about the competitive environment in the future—given the increased competition from Digicel and the Massy group in broadband and television—Elias said TSTT is strong enough to survive on its own.
"I do not subscribe to the notion that TSTT cannot remain as an independent company. TSTT is perfectly capable of being a dynamic company, but we need a change of attitude with dedication to service, aggressive marketing and enhancing the advantages we have by bundling packages of service," said Elias, who declared that he is very enthusiastic to serve as the chairman of the company.
Elias said at a meeting between four of the five recently nominated directors and the senior management on December 8, it was agreed that in the new dispensation TSTT would focus on customer service and marketing.
“We want every interface with TSTT to be a happy one. We are saying to the population of T&T that they own TSTT and we are going to make you proud of us. I want to generate a feeling in the country that TSTT cares.”
The new TSTT chairman said he wants to make the executives in charge of the services that TSTT provides responsible for the quality of service the population receives. To that end, Elias said he intends to create an email account that would allow anyone with a service complain to write to him.
Elias, a contractor who celebrated 50 years in the business in September, said there are two promises he is making to the population: “When things go wrong, we are going to fix it and we are going to make your interaction with us a happy one. We are going to ensure that customers know where to turn.”
He said the board and the senior management are determined to fulfil the promise he has made to improve TSTT’s service and its responsiveness to complaints.
NEL insertion
Asked why he thought he was asked to chair TSTT, Elias answered: “The five directors who have been asked to serve on the TSTT board are among the finest groups of people in this country. The directors, among them, have legal, financial, human resource, administrative and business expertise.
“In my own case, I have vast experience in business and finance and I am a consumer of the products that TSTT sells.”
Apart from Elias, the five TSTT directors who received their instruments of appointment last week are Ian Narine, Wendell Berkeley, Kimberly Erriah and Judith Sobion.
He said the five TSTT directors will be supplemented by up to four directors to be nominated by National Enterprises Ltd (NEL), the majority state-owned investment company that owns 51 per cent of the local telecommunications company. Cable & Wireless Communications (CWC) owns 49 per cent of TSTT.
“Those four directors are coming from NEL by agreement between NEL and CWC, which had to resign from the TSTT board as part of the approval by the Telecommunications Authority of T&T (TATT) of the CWC merger with Flow,” said Elias.
He said part of the agreement between NEL and CWC was that the local investment holding company would find a buyer for CWC’s 49 per cent stake in TSTT, an arrangement that Elias describes as “a most unfortunate agreement as there are several aspects of it that are of major concern to me.”
He added: “Having read the agreement between NEL and CWC, I feel that NEL’s previous board inserted itself into the process of the sale of CWC’s 49 per cent stake in TSTT in a manner that was inappropriate. That is a judgment shared by the new members of the board as well.”
He said CWC made a strategic decision in its own interest to leave TSTT and merge with Flow, which is their right.
Elias said: “What I have serious concerns about is the way in which that shareholders agreement between CWC and NEL caused NEL to become practically an advocate for the solution of CWC’s problem. CWC’s problem is of its own making and they should be allowed to go out to the world and try and find a buyer for the 49 per cent stake in TSTT.”
He said any company buying the 49 per cent stake would take all of the circumstances of CWC’s arrangement in TSTT—especially including the fact that CWC never had control of the management of the company—in arriving at a purchase price for the stake.
On the issue of whether CWC has ever formally offered to sell the 49 per cent stake in TSTT to NEL, Elias said his understanding is that if a buyer for the stake is found, NEL would have to give its consent and could not unreasonably withhold such consent.
