Telecommunications Services of Trinidad & Tobago Limited (TSTT) today wrote to its employee representative unions inviting them to consultations regarding a proposed refinement of its operating/business model.
Like other companies in Trinidad and Tobago, TSTT has been significantly impacted by the economic conditions brought on by the Covid-19 pandemic. This, coupled with increased consumer adoption of digital applications like WhatsApp and communications platforms like Zoom, has seen the steady erosion of traditional voice revenue. In Trinidad and Tobago, fixed voiced calling in terms of minutes and calls have declined by 50% over the past 10 years and mobile voice calling has declined by 20% in the same period according to the annual TATT market reports.
In addition, the legacy costs associated with redundant technology in its existing operating structure, continue to have a crippling impact on TSTT’s business and its results. During the past financial year which ended on the 31st March 2021, TSTT’s revenue fell by TT$453 million – 18% less than the prior year.
This material decline was partly due to issues related to the Covid-19 pandemic and a combination of economic and technological factors both unique to the Trinidad and Tobago market as a direct result of the global digital revolution in the telecommunications industry. Regionally and internationally, networks are under pressure: internet traffic is growing exponentially, but the price per gigabyte is declining almost as rapidly, and the result is a downward pressure on revenue growth and margins.
TSTT has had to focus on aggressively managing its expenses over the past year as these trends intensified, more so than its competitors who have global cost-economies of scale. The company introduced several initiatives, the most significant of which was a cost-cutting drive that included the containment of non-personnel expenses.
Commenting on the proposed action, TSTT CEO Lisa Agard said, “Given our current challenges, TSTT considers that it must now urgently restructure to remain competitive. We must move to an operating model that is more in line with industry benchmarks, and which gives us the ability to adapt and evolve with the constant developments in technology. This is our only option if we are to return to profitability.”
“Simply put, there is a new normal in our industry and TSTT considers that it has no choice but to adapt to it. Therefore, in keeping with the terms of our collective agreements, the employee representative unions have been invited to discuss the company’s future. We look forward to meeting with them in the coming weeks to see how best we can work together to ensure our collective success”, she added.
In his review of the company’s performance of the financial year ended March 31, 2021, Chairman Sean Roach said, “Regionally and internationally, networks are under pressure: internet traffic is growing exponentially, the price per gigabyte is declining almost as rapidly, and the result is a downward pressure on revenue growth and margins.”
“As the Covid-19 pandemic persists and the business continues to evolve in step with rapid technological development, the impacts will have to be counteracted by even further cost-containment initiatives in expense categories not contemplated in the financial year just ended.”
“We must immediately look at the implementation of innovative financial and technological solutions to enable the Group to build on the successes achieved during the last financial year. TSTT must become increasingly agile for us to maintain a competitive edge in the constantly changing world of digital telecommunications. Our plans for a more sustainable, competitive, and customer-focused future are currently being researched and a new strategy and direction is being designed for discussion with our key stakeholders,” he added.
TSTT will enter the upcoming discussions in good faith and with the hope that all parties will focus on achieving sustainable revenue generating initiatives, whilst also focusing on cutting operational expenses .
The company is ready to put forward what it believes to be a reasonable and workable operating model to best position it to survive during the remaining impacts of the pandemic and the new environment of continuous technological change that defines the broadband revenue business model. TSTT looks forward to engaging the representative unions to find common ground on the way forward.
