KeyTech Earnings Plummet

December 6, 2010

1keytechKeyTech, the Bermudian telecommunications provider, today (Dec.6) reported an almost 9% drop in revenues for the six months ending September 30, 2010 compared to the same period last year. And net income was down by almost a million dollars on a year-over-year basis also, falling from of $7,134,513 in 2009 to $6,203,318  this year.

KeyTech subsidiaries include The Bermuda Telephone Company Limited, Logic Communications Ltd., M3 Wireless Ltd., Bermuda Yellow Pages Limited and WestTel Limited. Quo Vadis Limited and Bermuda Cablevision Limited are KeyTech affiliates.

Reflecting what KeyTech CEO Sheila Lines called “the challenging economic climate”, the firm has launched a number of cost-cutting initiatives in recent months, including staff redundancies and efforts to rein in operating expenses.

KeyTech’s consolidated net income for the six month period ended 30th September 2010 is $3,218,319. During the period $2,984,999 of staff separation expenses were incurred. Excluding these expenses net income for the period was $6,203,318 compared to net income of $7,134,513 for the same period last year.

“We have seen the impact on consolidated revenues of lower domestic demand and continuing cost reduction measures by our customers,” said KeyTech CEO Sheila Lines. “Anticipating these trends we focused on delivering customer service to maintain our market shares and on lowering our operating costs through tight control of operating expenses and reductions in staff numbers.”

Operating revenues for the period were $52,650,206 compared to $57,596,835 for the six month period ending September 30th 2009 a decrease of $4,946,629 or 8.6% due to revenue declines across a wide range of services reflecting the challenging current economic climate.

Cellular voice revenues decreased due to increased handset subsidies, increased license fees and reduced roaming revenues. Hardware and consulting revenues also declined as customers reduced expenditures.

According to Ms. Lines, “We have continued to invest in our network assets to deliver quality service to customers and to enhance our data capabilities. Data revenues have proven to be the most resilient in the face of lower economic activity. In December we will complete an expansion of our cellular towers which will substantially increase capacity and improve service quality in our 3G network.As part of this upgrade we will be offering 3G+ service in 2011. In Cayman we commenced deployment of fiber in George Town and we expect to complete this network expansion byMarch 2011.”

In June 2010 KeyTech increased its ownership in WestTel, its Cayman subsidiary, to 100% and in November 2010 WestTel re-branded to Logic Communications. The transaction resulted in a charge to retained earnings of $1,103,869 representing both the noncontrolling interest in the balance sheet on the date of acquisition and the cash consideration for the remaining common shares.

“We are developing a major capital program to improve speed and reduce operating costs driven by faults in our Bermuda fixed line network by expanding our fiber plant. We anticipate commencing this substantial capital investment program in 2011. A critical element in our decisions to invest in new infrastructure will be policy choices the Government makes, said Ms Lines. “Therefore we continue to provide information to the Government regarding our plans and to highlight those factors that can accelerate this investment which will enhance Bermuda’s core communications infrastructure”.

Equity earnings in affiliates for the six month period were $1,574,728 compared to $1,109,675 in the prior period due primarily to growth in earnings from Bermuda CableVision. Basic and fully diluted earnings per share for the six month period ended 30th September 2010 were $0.22 compared to $0.49 for the same period last year.

Investment income and realised gains and losses from marketable securities for the period were $17,173 compared to a loss of $85,507 for the prior period. Income from noncontrolling interests for the period was $87,548 compared to $214,127 for the same period last year.

The company declared a dividend of $0.12 per share for the quarters ending June 30th 2010 and September 30th 2010.

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Comments (2)

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  1. mixitup says:

    Has anyone sent the staff on a customer service training course? Here I will explain.

    1. When you finish dealing with a customer (look up and acknowledge the next one in line with a simple “Someone would be with you shortly” (They tend to take another 3 minutes finishing their paper work then shout NEXT!)

    2. When the customer gets to your counter tell them “Sorry to have kept you waiting”

    3. Use their names through-out the entire transaction.
    4. Give them other options other than “sorry I can’t”
    5. Eye contact is great also
    6. Tell them you appreciate their business and have a Great day!

    These simple things will make waiting the 25 minutes to be served not feel so bad. Then to wait in line and encounter a miserable, unfriendly employee as I do every time! It will also help your bottom line as Great Service is not costly and has never turned away a customer!

  2. Interesting says:

    What a surprise this is. I think that it is a direct result of the worst customer service possible.

    This is a result is a badly managed company. They would like to blame it on the union and the pool of employees that they have to draw from but the people that come to fix the phones are wonderful. They Are polite and knowledgeable.

    Keytech needs to reevaluate their entire market strategy. Perhaps they should listen to what their customers are asking for and maybe even offer some service. The reality is that they make AT&Ts service look awesome.

    I am trying to distance my self from all of your companies as quickly as I possibly can. I pay for 3G but I can only receive edge. You are my home ISP but I can’t download any thing after 7:30 because your network is over subscribed. I spend 20+ mins on the phone trying to get service only to be cut off.

    Bury your head in the sand and blame it on the economy but the reality is that your customers have you pegged and they are voting with their check books.