March 31, 2003


According to the FY 2001 audited statements of the Guam Telephone Authority, which were prepared by Deloitte Touche Tohmatsu, GTA’s revenues declined by $1.7 million dollars going from $46.4 million in FY 2000 to $44.7 million in FY 2001 while operating expenses increased $4 million over the same period from $43.6 million and climbing to $47.6 million. GTA paid another $6.5 million on interest on its debt. When “other income and expenses” are factored in GTA did realize net income of $5 million in FY 2001. However, according to Public Auditor, Doris Flores Brooks, this was only because of the Legislature’s forgiveness of GTA’s portion of the unfunded liability to the Retirement Fund to the tune of $11.8 million. Had it not been for the $11.8 million forgiveness of the unfunded liability, GTA would have experienced a net loss of $6.8 million.

Among the factors contributing to the increase in operating expenses were the privatization efforts, which amounted to $4.1 million, product implementation for DSL and Internet development of $1.6 million and $523,000 for price and cost studies. The major consultants paid for privatization efforts were Price Waterhouse Coopers $1.2 million, Patton Boggs $1.1 million, Government Intelligence Proposal & Resources (GIPR) $1 million and KPMG $662,000.

For the product implementation Price Waterhouse was paid an additional $1.6 million plus another $426,000 for the price and cost studies. In total Price Waterhouse was paid over $3.2 million for these various consulting services during FY 2001. In FY 2000 Price Waterhouse received another $1.2 million for “Competitive Readiness Assessment, which was ordered by the PUC and the PUC rate case filing.

GTA had net accounts receivable totaling $7.4 million. This is after subtracting $8 million that GTA has set aside as a reserve for uncollectible accounts. This essentially means that for every dollar of accounts receivable, GTA can expect to only collect 48 cents. The $8 million reserve is up $500,000 from what it was in FY 2000. GTA management has indicated that it will aggressively abide by its disconnection policy in order to improve its collections.