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LTC Mobile Risks Solvency

by newsmanager

MONROVIA: The financial performance of the Liberia Telecommunications Corporation (LTC) Mobile has continued to weaken since FY2021 (governance 2021).

According to the Bureau of State Enterprises PORTFOLIO OF STATE-OWNED ENTERPRISES Annual Aggregate Performance Report 2023, the corporation recorded a huge operating deficit for FY2022 compared to the prior year.

“Credit risk for LTC Mobile is high as indicated by the very high accounts receivable collection in 2022 and 2023 at 1,628 days and 1003 days, respectively,” the report added.

“These operational and credit management issues have the potential to impact the Corporation’s cash flow and solvency if nothing is done to reverse the trend,” the report indicated.

It asserted that “the corporation recorded a negative free cash flow of US$2.73 million and US$0.52 million during the last two years, which indicates a potential cash flow and solvency problem for the business.

Thus, the operations of LTC Mobile remain a potential source of fiscal exposure for the government, given its declining financial performance amidst competition from private companies and the unavailability of the capital requirement to expand its network and support infrastructure”.

The Liberia Telecommunication Authority (LTA) was created by the Liberia Telecommunication Act of 2007. LTA is the statutory public authority over the telecommunication sector of Liberia.

The Telecom Authority has the responsibility to regulate the telecommunication sector through efficient management and monitoring spectrum resources, and to foster the provision of accessible and affordable telecommunication services in Liberia.

LTA is also responsible for facilitating the development of the telecom of Liberia to promote economic and social development.

As the statutory public authority over the telecommunication sector, LTA raises its income from its regulatory levies, licensing of operators, spectrum authorization, international calls termination, surtax, and universal access contributions.

Fees collected from the telecom sector are distributed between LTA and the Government of Liberia (GOL) at a ratio of 40:60, except for international call termination fees and surcharges, which are distributed at a ratio of 49:30.6:24.4 to TIA, GOL, and LTA, respectively.

The report asserted that LTA prepares its financial statements, using IFRS as required by the Public Financial Management (PFM) laws.

The analysis in this section is based on the unaudited annual financial report submitted by the Telecom Authority to the BSE.

According to the report, LTA did not provide any on its key developments and achievements during the fiscal year under review.

For the fiscal year 2023, LTA’s total gross operating revenue amounted to US$ 31.44 million, 5 percent down when compared to the outturn for 2022.

The share of the gross telecom revenue accrued to GOL and paid to the CFA during 2023 was US$10.21 million, 66 percent more than the revenue-sharing remittance for 2022.

LTA’s share of the revenue for the fiscal year, according to the report, was US$21.23 million, 21 percent reduction from the actual reported in 2022.

LTA’s gross revenue from FY2019 to the fiscal year under review grew by a CAGR of 15 percent from US$16.36 million to an outturn of US$31.44 million reported at the end of December 2023.

The report added that the total operating expenditure of the Telecom Authority grew by 29 percent from US$8.45 million in 2022 to US$ 10.87 million in 2023.

Spending on goods and services accounted for 55 percent and staff compensation accounted for 38 percent of the total operating expenditure, according to the report.

It indicated that the Telecom Authority’s corporate social spending incurred for the year was about US$0.76 million, accounting for 7 percent of the operating expenditure.

Capital expenditure for the fiscal year stood at about US$1.92 million. LTA’s total operating costs rose by a CAGR of 17 percent from US$ 5.05 million in FY2029 to the outturn in 2023.

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