What’s Telemedia’s True Worth after Settling Massive Debts?

With the annual general meeting scheduled for September twenty-ninth, Belize Telemedia has released its Financial Statements for the Year ending March 2015.  The company has been at the center of public debate because after six years of legal wars, Government has agreed to settle compensation for its 2009 nationalization.  Now, viewers will remember that shares in the company were offered to the public by the Government at the end of 2010 to a great fanfare, with promises of growth and performance, and with the Social Security Board investing fifty million dollars to purchase twenty percent of the company.  Well, B.T.L.’s performance has fallen substantially short of the promises made, and from a financial perspective at least, it continues to decline. According to the figures released, revenue has stagnated over the past five years, with the revenue at one hundred and forty four million being thirteen percent less than the one hundred and sixty five million dollar figure projected in the sales prospectus after nationalization, and with that gap continuing to widen. The most marked failure, however, is the profit performance. Profit has fallen each year, and is now about half of that recorded in 2011, and at only forty percent of the forty two million dollars annual projected profit. Indeed, we have to go back to the last century to see operating profits that were as low as this. With the Government already charging record low taxes to Telemedia, and with the economy having improved, both of which should have helped, it is unclear if and how the Government intends to remedy this situation.  From the perspective of the Social Security Board, and the hundreds of other small investors that bought into what was promised to be a very profitable and growing company, it is unclear what they will make of this. The Government is also settling an old Telemedia debt to the British Caribbean Bank which has now more than doubled in size as a result of accrued interest and charges.  B.T.L. Chairman Net Vasquez has agreed to repay the massively increased debt inclusive of default interest rates. With Telemedia having a book asset value of two hundred and sixty six million dollars, taking on this debt is the equivalent of reducing the value of the company by one third, bringing the net book value of Telemedia down to one hundred and seventy million dollars. For the Belize Social Security Board, they will now be holding an asset which cost them fifty million dollars in 2010, which was expected to increase to seventy million by this date, but has instead reduced to thirty-four million dollars.   So S.S.B., and the other small investors, have an investment worth half of what it was projected to be at this date, and giving annual dividends at half of what they were projected to be. Telemedia Management continues, however to very up-beat about the prospects of the company, stating that they are expecting strong future growth, whilst continuing to invest heavily in its infrastructure, with increased revenues and an improvement in their bottom line.