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Sunday, April 18, 2021
Home Editorial Halting BTL’s “race to the bottom”

Halting BTL’s “race to the bottom”

Belizeans who pay keen attention to the financial landscape have been aware that Belize’s most celebrated company, Belize Telemedia Limited (BTL), has for some time not been doing as well as it used to, and when it surfaced last year that the company might have been dodging taxes owed to the government, Belizeans knew for sure that something was very wrong.

Recently appointed Chairman of the BTL Board, Mr. Mark Lizarraga, said in the Annual Directors’ Report that the company realized meager profits of only $2.5 million over the fiscal year, April 1, 2019, to March 31, 2020. When we factor in that just five years ago we paid a reported half a billion dollars in US currency to reacquire the company from ownership that we believed had gone rogue, the profits for the fiscal year reported are meager indeed.

BTL, which was formerly the Belize Telephone Authority (BTA), had always been the star in Belize, a successfully-run modern company that featured Belizeans in every aspect of the operation.

Briefly, the records show that a PUP government pumped $18.6 million into BTA in the 1979-to-1984 period.

The UDP government of 1984 to 1989, decided in 1987 to take full control of telecommunications in the country, and offered Cable & Wireless PLC, which had a contract to provide international telecommunications services for Belize, the first option to join BTA in forming the new company, but that entity declined. When the new company was formed the government controlled 51%, British Telecom 25%, and 24% of the shares was reserved for Belizeans at home and abroad.

The new company, called Belize Telecommunications Limited, was given a 15-year exclusive license to operate telecommunications services in Belize, beginning on January 1, 1988.

The most important measure of persons contracted to run companies is the returns they deliver to shareholders, and BTL, even in the leanest of times, was a winner.

1999 was one of the company’s best years. A 1999 report on Channel-Five said that over 500 shareholders were at the Biltmore Plaza when the company declared dividends of 59 cents per share, a payout the station said was “so large as to be almost embarrassing.”

In 2001 Lord Ashcroft’s Carlisle Holdings Ltd. got control of 52% of the shares in BTL, and things began to change. In 2002, Channel Seven reported that revenues for the company “rose 10.6%, to a record $111 million, while net after-tax profits jumped 31%, to over $34 million.” However, at the Annual General Meeting there was “a good deal of grumbling from those seated in the audience, led by the Social Security Board, who wanted a dividend substantially larger than the 29.5 cents decreed by majority owner and B.T.L. chairman, Lord Ashcroft.”

Lord Ashcroft did not toe the line of the PUP government that oversaw his taking the reins of the company, and the government, declaring among other things that the company was not supportive of its programs to provide internet services to rural areas and schools, moved to acquire it.

In late 2003 the government of that day, PUP, forced the Ashcroft Group to sell most of its shares in BTL, and the government then sold those shares to American investor, Jeffrey Prosser, on a promissory note. Prosser failed to make good on the IOU, and the shares then went back to Ashcroft. There was much confusion about who actually owned the company between 2003 and 2007, but 2006 was a good year for those shareholders who hadn’t been bought out by big capital.

Channel Seven reported that in 2006 profits for BTL increased 1,300% over the year before, largely because of an increase of cell phone use and users, and as a result, the company was expected to “declare a 50 cent dividend per share, which is a 25% return on the original investment.”

In 2009 a UDP government wrested control of BTL from the Ashcroft Group, and since then the Government of Belize has been calling the shots in the management of the company. The Amandala, in a 2013 story titled, “BTL offers highest dividends since 2009”, said the directors of the company had proposed “a dividend of 25 cents a share, a slight increase from 24 cents last year”, and a 2017 story in the newspaper said that at its annual AGM, BTL had reported dividends of 19 cents per share, after paying out 28 cents per share in 2016.

But even in the company’s best years in the last decade, the picture might not have been as bright as dividends for shareholders made it appear. Then BTL Executive Chairman, Net Vasquez, said in 2013 that the company was “paying a bigger share in dividends…although profits had fallen.”

When Lizarraga took over as BTL Board Chair, he stated that the company in which “the government and people had invested over one billion dollars”, had lost the “competitive advantage that [it] once enjoyed”, that it was becoming “just another provider of some services in an environment where we continue to compete with smaller and nimbler companies.”

The Board Chair’s report said that for the fiscal year April 1, 2019, to March 31, 2020 (to just when the pandemic began), “earnings per share decreased to ONE CENT [our emphasis] from 17 cents per share from the previous year.”

The report said BTL had invested $468 million over the last ten years, and while this has resulted in significant growth in the company’s asset base, the growth in revenues hasn’t provided “a reasonable rate of return.” The report says prices for the services BTL provides have decreased, that “increased competition from Internet Service Providers (ISP’s) and cable operators has created a race to the bottom.”

Lizarraga ended his report to shareholders of the company on an upbeat note, vowing to return the company to profitability. That’s no small task, for while he has to deliver for the 600-plus employees of the company, the hundreds of small shareholders (BTL listed 908 small shareholders in 2009), the SSB, the government and the people of Belize, he also has to consider the many private businesses that are in direct competition with the company.

Lizarraga isn’t perfect, but many believe he is sincere and have faith in him because he was outstanding as a senator, both for the BCCI and for his country. An insolvent BTL is an utter disaster, so we all have to pray that Mr. Lizarraga and his team turn the company around, from the race to the bottom.

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