AROUND this time last year the future of majority state-owned telecoms provider, TSTT hung in a balance. According TSTT chief executive, Dr Ronald Walcott, the company was heading into financial ruin because of the way it was structured. It was practically a loss-making entity. Profit was down by $479 million for the six months ended September 2018, the annual wage bill stood at $768 million or around 30 per cent of revenue, TSTT’s debt burden was $1.8 billion and it had an annual operating loss of $32.5 million. Then, two years into its five-year strategic plan to transform from 20th century legacy telecommunications company into an agile broadband 21st century communications company, came news of a “staff rationalisation” exercise in November 2018, which resulted in 709 senior and junior employees being sent home. At the end of the exercise, TSTT’s headcount was reduced to approximately 1,300. The job cut was intended to realise results in savings of approximately $270 million annually, bringing TSTT in line with the industry benchmark for employee costs, which is 15 per cent of revenue. Fast forward to December 2019, TSTT is boasting of a “significant” turnaround, with an operating profit crossing $160 million as of October. Before the restructuring exercise, TSTT’s employee cost as a per centage of revenue was 29 per cent—nearly twice times the industry benchmark. “Now we are in the 18 per cent range,” said Walcott in a recent interview with Express Business, at TSTT House in Port of Spain. “Our maintenance cost…industry standard is around 15 per cent. We were around 19 per cent before and now we are around 16 per cent. In terms of other operating expenses, we were at 19 per cent before, now we are at 15 to 16 per cent. “Our EBITDA (earnings before interest, taxes, depreciation and amortisation) margins were in the 20s last year, it’s now in the low 30s but our intention is to get it to around 35 per cent, which gives us the operating breathing room so when we start to generate profits as we are doing now and to be able to continue to move to where we get it to 40 per cent in three to five years from now,” the TSTT boss added. “We’ve turned the company around in a very significant way and we’ve developed a platform for us to continue to press forward. We’ve done in excess of what we intended and we continue to be on that path,” he went on. Surplus employees “The goal was not retrenchment,” Walcott posited, as he touched briefly on what he described as the tough decision last year when more than a third of TSTT’s workforce was retrenched. “I always find it’s better to put things in perspective, because when you talk about retrenchment you make it out as if that was not the goal. The goal was not retrenchment. We developed a strategic plan in 2016. Our plan was to transform TSTT from being a legacy telecoms company that was heading into financial ruin because of how it was structured at a fundamental basis,” he explained. “This had to do with the business support systems that were outdated. It had to do with the business model that was outdated and it had to do with the fact that traditional revenue was in decline. For example, international direct dialling. In the past if you travelled somewhere and you had to call home you would do that on an international switch. Now everybody does that on WhatsApp,” he noted. “So the company has to make some fundamental adjustments as a telecoms provider,” Walcott pointed out. To get the company up to the times, he said $1.3 billion was spent on network upgrades and expansions. “And then we started to transform the business support systems. We automated processes. And then because of those things that we did we ended up in a situation where we had surplus employment. It was because of that we then had to make the tough decision that if these employees are surplus to the organisation’s needs then we went about dealing with what is required,” he said. Walcott said hundreds of employees were redeployed into different roles and responsibilities, with new jobs being created along the way. “Where we had excess to both requirements then we went the separation route. So I want it to be put in context. We didn’t set out to retrench people,” he said. The turnaround Aside from cutting its annual wage bill, Walcott said to boost profitability and revenues the company rolled out a suite of new products. “For example, on the enterprise side we have launched a whole new set of software-as-a-service. We are providing software operations to a number of entities now and we will continue to grow that business. Some of these solutions are still in train,” he said. He stressed that TSTT’s revenue goals were not “bounded by the geography of T&T” but that the company was also looking at some regional and global partnerships. “In wireless we’ve launched a whole new suite of products and services. We’ve upgraded our entertainment packages. We have new broadband solutions. We are still in the process of rolling out new technology. We are rolling out 5G, which brings a whole new suite of possibilities on the revenue side,” he said. And come the end of 2020, he said TSTT is looking to migrate customers off the legacy copper lines to wireless or fibre solutions. “We are going to offer them greater capabilities and possibilities but also the cost of operating those systems are significantly less,” he stressed. 2020 targets As the to the plans for 2020, Walcott said now that the core network upgrades have been completed, TSTT is embarking on a national broadband strategy. “That national broadband strategy says very simply that we want to provide ubiquitous, affordable broadband for all. We believe that broadband access should be available to everyone,” he said. “So as we roll out things like 5G and make it more pervasive, we are providing capabilities to small and medium businesses that didn’t exist before because now they can afford to have access to software solutions that before it would have been cost prohibitive. So we will continue on that path. We are going to focus a lot on cloud-based solutions, IOT (internet of things) solutions, software as a service.” “We are going to focus a lot on the regional growth of the business. We are going to be focussing a lot of providing software and services up the island. We want to complete the copper migration by the end of next year so that will be a main focus for us as we go into the new financial year.” Asked what he considered to be his greatest accomplishment since coming into office in 2014, Walcott said it was the ability to transform a business that was in decline to an agile, broadband company that is now on a growth path. “When I came in, I met a business that was at an inflection point. The market and the communications world was changing dramatically; what we call disruptive movement in the business. But the business was still designed and constructed around a legacy telecommunications company. So that represented a scenario that if we did not transform this business it was not going to survive. It was going to become a burden on the taxpayer,” he said. “So we had to create a fundamental plan, a plan that says we are going to completely disrupt this old legacy system, create this new business model, transform the technology, do it over a period of five years, at a cost of $4 billion and I was able to oversee that transformation. Obviously I did not do it myself but it was no easy task.”