CCOMMITTEDOMMITTED 22008008 AANNUALNNUAL RREPORTEPORT “Greatness is not in where we stand, but in what direction we are moving.” —Oliver Wendell Holmes Contents The Bahamas Telecommunications Company Limited Annual Report For The Year Ended December 31, 2008 Introduction . .2 Vision and Mission Statement . .4 Chairman’s Message. .5 Corporate Governance . .6 Executive Management. .7 Acting President & CEO Report. .8 Committed to Our Customers . .13 Our People . .16 Our Community . .21 Our Region . .27 AUDITED FINANCIAL STATEMENTS December 31, 2008 . .28 Independent Auditors’ Report . 29 Balance Sheet . .30 Statement of Operations . 31 Statement of Changes in Equity . 32 Statement of Cash Flows . .33 Notes to Financial Statements. 34-56 BTC Annual Report 2008 1 CCOMMITTEDOMMITTED Ray Kroc, the man who turned a burger into a global empire called McDonalds, understood commitment. In a few simple words, he explained it as well as anyone ever has. “We take the hamburger busi- ness more seriously than anyone else,” he said. Just as simple as that. There was something else Kroc understood. Commitment is a fi rst step, but it takes work and investment to succeed. “Luck,” said the man whose words of wisdom are just as true 25 years after his death “is a dividend of sweat. The more you sweat, the luckier you get.” The Directors, Management and Staff of BTC understand the union of commitment and sweat. They know that the years ahead are going to be very different from the years before. They know, they feel the pressure and the motivation of a company climbing higher, moving faster to meet the challenge of competition following privatization. They feel the excitement. The fruits of BTC’s labour and the multimil- lions of dollars of major capital investment are detailed throughout this annual report. The Cellular Network has been upgraded and an array of products and services never before available in The Bahamas has been launched. Increased training expenditure boosted the skill set of human capital and a new perfor- mance evaluation system was introduced. At the same time, BTC has maintained its strong position as a corporate citizen. It was a year of scaling heights, look- ing toward the peak and getting ready to celebrate when it is reached. There is no turning back. The commitment to tomorrow is unshakable, willingness to enter the race and win palpable. The pace quickens. The commitment takes hold. 2 BTC Annual Report 2008 COMMITTED BTC Annual Report 2008 3 Vision To enhance The Bahamas’ competitive position in the global community by developing and maintaining the most modern, cost effective telecommunications solutions for our customers. Mission To provide superior services; To prepare to operate in a competitive environment; To bridge the digital divide by increasing internet accessibility and affordability; To enable our employees to maximize their potential and share in our success; To create value for our shareholders; and To improve the quality of life for the people of The Commonwealth of The Bahamas 4 BTC Annual Report 2008 Chairman’s Message To fail to create a competitive telecoms environment in The Bahamas at this juncture would be a grave disservice to the residents, visitors and businesses of The Bahamas. of the new Telecommunications Sector I am privileged to serve as Chair- Policy will call for a fully liberalized man during such a dynamic period and competitive environment where and to sign what is likely to be an all elements of telecommunications historic document—the last Annual and broadcast will be subject to open Report of BTC as a majority govern- and full competition. Interesting and ment-owned entity. exciting times lay ahead! As I write this message, I am re- The Board and Management minded that it was only 10 years ago of BTC have recognized that the that telecom services in the majority ongoing success of the company in a of Caribbean countries were operated liberalized and competitive environ- by monopoly providers. Today, nearly ment is dependent on the investments every country enjoys the diversity of that the company makes today. This competition. To fail to create a com- report highlights the efforts of BTC in petitive telecoms environment in The 2008 to expand its range of products, Bahamas at this juncture would be a to improve its service to its customers, grave disservice to the residents, visi- Julian W. Francis, CBE and to modernize and expand its tors and businesses of The Bahamas. core infrastructure. The intent of all To deny BTC the ability to be ready t is my pleasure to present the 2008 these activities has been to ensure for competition by providing it with a Annual Report of The Bahamas that a BTC operating in an open partner with global reach and ample Telecommunications Company Ltd. I marketplace does not merely survive, resources would be a grave disservice The theme of this annual report, but that it thrives. to the company and the hundreds Committed, speaks to the effort and This report provides, also, the of dedicated persons who have built resolve of the company’s Board, highlights of these investments; the it over many decades. Born in 1892 Management and Staff as we work ongoing implementation of the $73 when the fi rst underwater cable was diligently toward a BTC committed million Next Generation / MPLS laid between West Palm Beach and to lead in a liberalized, competitive Networks that will provide an IP core Cable Beach in New Providence (from Bahamian telecoms sector. creating a cutting edge, ultra modern which Cable Beach got its name), For almost one hundred years, BTC platform on par with any telecom- BTC is on the threshold of a new era. has enjoyed a virtual monopoly in the munications provider in the world; Exciting times lie ahead. With com- telecommunications sector. Im- the $42 million investment in BTC’s mitment, a new BTC will emerge, and minent and profound changes in the GSM Network to ensure provision maintain its role as a leading service operating environment will, however, of top-quality cellular phone service provider and model corporate citizen. radically reshape the marketplace throughout The Bahamas, while On behalf of the Board of Directors, for telecommunications in The permitting the seamless turndown I would like to express my apprecia- Bahamas. In the very near future, we of the out-dated TDMA cellular tion to the men and women of BTC anticipate that the shareholders of the network. This is in conjunction with who are the force behind its drive and company—the Government of The the continued roll-out of customer- commitment. Bahamas—will complete a privatiza- centric products and services such as tion exercise involving the sale of a iText and the introduction of pre-paid controlling stake in BTC to a strategic roaming. partner. Concurrently, we expect the Prudent business practice contin- introduction and passage of legislation ues to dictate substantial investment that will create a modern and vibrant in wireless services, products and Julian W. Francis, CBE regulatory framework for both infrastructure, as the wireless Chairman telecommunications and broadcasting. platform now generates almost 70% We are certain that the strategic thrust of BTC’s revenue. BTC Annual Report 2008 5 Corporate Governance MINISTER RESPONSIBLE FOR THE BAHAMAS TELECOMMUNICATIONS COMPANY LIMITED The Honourable Zhivargo Laing, M. P., Minister of State for Finance BOARD OF DIRECTORS Executive Chairman, Claretta Duncombe, Raymond L. Jones Jr., Julian W. Francis, CBE, Former administrator Chief Operating Offi cer, Former Governor, Central Bank Deloitte & Touche Freeport Container Port, Freeport of The Bahamas Harbour Company & Grand Bahama Airport Company Deputy Chairman, The Very Reverend Cecile B. Greene, James Moss, Treasurer & Vice Patrick Adderley, Dean of Nassau & Chief Financial Offi cer, BEC President of Operations, Rector, Christ Church Cathedral Deltec Bank & Trust Limited Garth Buckner, Ian Hepburn, Dedrie Prescott, President, Sandyport Managing Director, Providence Customer Service Development Company Technology Group Representative, BEC 6 BTC Annual Report 2008 Executive Management Seated left to right: Felicity Johnson, Tellis Symonette, I. Kirk Griffi n, Antonio Stubbs, Paul McClean. Standing: Ryan Antonio, Helene Ferguson, Henry Romer, Charles McPhee, Alfred Phillips, Nickola Dawkins, Marlon Johnson, Lisa Major, Jeffery Moncur, Dale Knowles. Mr. I. Kirk Griffi n, Acting President & CEO Mr. Paul McClean, Chief Financial Offi cer Mr. Antonio Stubbs, Senior Vice President - Operations Mr. Tellis Symonette, Senior Vice President - Family Islands & Administration Mr. Alfred Phillips, Vice President - Planning & Engineering Ms. Felicity Johnson, Vice President - Legal, Regulatory & Interconnect. & Co. Secretary Ms. Helene Ferguson, Vice President - Human Resources & Administration Mr. Charles McPhee, Vice President - Internal Audit Mr. Henry Romer, Vice President - Northern Bahamas Mr. Dale Knowles, Vice President - Network Services Mr. Jeffery Moncur, Vice President - Customer Services Mr. Ryan Antonio, Deputy Chief Financial Offi cer Mr. Marlon Johnson, Vice President - Marketing & Sales Mrs. Nickola Dawkins, Acting Chief Information Offi cer Ms. Lisa Major, Vice President - Training & Development BTC Annual Report 2008 7 Acting President & CEO’s Report In fi scal 2008, BTC contributed $41.4 million to the Public Treasury, including a $25 million dividend payment to its shareholder, the Government of The Bahamas. I. Kirk Griffi n iscal 2008 was one of the busiest