TelEm: Digging itself out of a hole

(𝘕𝘰𝘵𝘦: 𝘋𝘳𝘪𝘷𝘦𝘯 𝘣𝘺 𝘢𝘯 𝘪𝘯𝘤𝘦𝘴𝘴𝘢𝘯𝘵 𝘤𝘶𝘳𝘪𝘰𝘴𝘪𝘵𝘺 𝘢𝘯𝘥 𝘨𝘶𝘪𝘥𝘦𝘥 𝘣𝘺 𝘮𝘺 𝘪𝘯𝘴𝘵𝘪𝘯𝘤𝘵𝘴, 𝘐 𝘴𝘰𝘶𝘨𝘩𝘵 𝘢𝘯𝘥 𝘸𝘢𝘴 𝘨𝘳𝘢𝘯𝘵𝘦𝘥 𝘢𝘯 𝘪𝘯𝘵𝘦𝘳𝘷𝘪𝘦𝘸 𝘸𝘪𝘵𝘩 𝘮𝘦𝘮𝘣𝘦𝘳𝘴 𝘰𝘧 𝘵𝘩𝘦 𝘮𝘢𝘯𝘢𝘨𝘦𝘮𝘦𝘯𝘵 𝘵𝘦𝘢𝘮 𝘰𝘧 𝘛𝘦𝘭𝘌𝘮 𝘢𝘣𝘰𝘶𝘵 𝘢 𝘤𝘰𝘶𝘱𝘭𝘦 𝘰𝘧 𝘸𝘦𝘦𝘬𝘴 𝘢𝘨𝘰. 𝘈𝘵 𝘵𝘩𝘦 𝘵𝘪𝘮𝘦, 𝘵𝘩𝘦 𝘴𝘱𝘰𝘵𝘭𝘪𝘨𝘩𝘵 𝘩𝘢𝘥 𝘳𝘦𝘤𝘦𝘥𝘦𝘥 𝘧𝘳𝘰𝘮 𝘵𝘩𝘦 𝘨𝘰𝘷𝘦𝘳𝘯𝘮𝘦𝘯𝘵-𝘰𝘸𝘯𝘦𝘥 𝘵𝘦𝘭𝘦𝘤𝘰𝘮𝘮𝘶𝘯𝘪𝘤𝘢𝘵𝘪𝘰𝘯𝘴 𝘱𝘳𝘰𝘷𝘪𝘥𝘦𝘳, 𝘰𝘯𝘭𝘺 𝘵𝘰 𝘣𝘦 𝘵𝘶𝘳𝘯𝘦𝘥 𝘰𝘯 𝘸𝘪𝘵𝘩 𝘮𝘰𝘳𝘦 𝘪𝘯𝘵𝘦𝘯𝘴𝘪𝘵𝘺 𝘵𝘩𝘪𝘴 𝘸𝘦𝘦𝘬. 𝘊𝘰𝘯𝘴𝘤𝘪𝘰𝘶𝘴 𝘰𝘧 𝘵𝘩𝘦 𝘥𝘢𝘯𝘨𝘦𝘳𝘴 𝘰𝘧 𝘵𝘩𝘦 𝘴𝘪𝘯𝘨𝘭𝘦 𝘴𝘵𝘰𝘳𝘺, 𝘸𝘩𝘪𝘤𝘩 𝘕𝘪𝘨𝘦𝘳𝘪𝘢𝘯 𝘯𝘰𝘷𝘦𝘭𝘪𝘴𝘵 𝘊𝘩𝘪𝘮𝘢𝘮𝘢𝘯𝘥𝘢 𝘕𝘨𝘰𝘻𝘪 𝘈𝘥𝘪𝘤𝘩𝘪𝘦 𝘸𝘢𝘳𝘯𝘴 𝘢𝘨𝘢𝘪𝘯𝘴𝘵, 𝘐 𝘴𝘦𝘵 𝘰𝘶𝘵 𝘵𝘰 𝘴𝘦𝘦 𝘸𝘩𝘢𝘵 𝘰𝘵𝘩𝘦𝘳 𝘴𝘵𝘰𝘳𝘪𝘦𝘴 𝘐 𝘤𝘰𝘶𝘭𝘥 𝘧𝘪𝘯𝘥 𝘢𝘣𝘰𝘶𝘵 𝘛𝘦𝘭𝘌𝘮).

𝐁𝐲 𝐅𝐚𝐛𝐢𝐚𝐧 𝐁𝐚𝐝𝐞𝐣𝐨 for The People's Tribune

The following is what came out of my conversation with the TelEm management team led by Mr. Randell Hato, Chief Financial Officer, CFO and Acting Chief Executive Officer, CEO. He was accompanied by Mr. Offerman, the Interim Technical Director, Ms. Michelle Djojodimedjo, Director of People and Culture and Mr. Adrian Lista in charge of Marketing.

𝐀 𝐃𝐢𝐟𝐟𝐢𝐜𝐮𝐥𝐭 𝐅𝐢𝐧𝐚𝐧𝐜𝐢𝐚𝐥 𝐒𝐢𝐭𝐮𝐚𝐭𝐢𝐨𝐧

“Financially, I would say TelEm is in a difficult situation,” Mr. Randell Hato said when asked about the financial health of TelEm. “If you exclude the investments, I would say we should be fine. We have loans that we are servicing, but remember we are in a network transformation form, so we are investing systematically in the network – both the fixed and the mobile, and we don’t have new loans.

"There are existing loans that were used in the past for the fiber, but we don’t have new capital. Basically, we’re using our own operational cash flow to finance the investments and we need to do that because if we don’t change the network we will not be able to compete. That’s why we’re between a rock and a hard place. It takes quite some patience to manage that. And that makes us a bit vulnerable.”

He added that some vendors complain about late payments, but “eventually everybody is being paid.” TelEm is servicing its obligations, though cash flow is tight. “Once we fix the network, the cash flow position will improve,” Hato noted.

Stories of imminent bankruptcy are false, he said, explaining that TelEm is working on selling its current headquarters building, which has become “too big” since the 2024 downsizing that reduced staff from 132 to 58.

𝐁𝐮𝐢𝐥𝐝𝐢𝐧𝐠𝐬 𝐟𝐨𝐫 𝐒𝐚𝐥𝐞

TelEm intends to sell its headquarters and the old Cable TV building in Madam Estate, as part of what Hato called “restructuring of the balance sheet.” Proceeds would be used to reduce exposure to lenders and finance investments.

He emphasized that the sales are not a “sell-out” but part of a deliberate strategy. Board and lender approval is required for any transaction.

The old Cable TV property is no longer useful since technology has shifted to IP-based TelTV, which currently has over 1,000 subscribers. TelTV is also providing HotelTV services to local hotels and is being used to strengthen TelEm’s broadband offering.

Hato noted that TelEm pays over US$500,000 annually for legal content while competitors pirate content, making price competition unfair. Government cannot realistically stop illegal providers, so TelEm must focus on quality service and creating local content.

𝐆𝐨𝐯𝐭. 𝐈𝐧𝐯𝐨𝐥𝐯𝐞𝐦𝐞𝐧𝐭 𝐢𝐧 𝐓𝐞𝐥𝐄𝐦

As a government-owned company, TelEm faces additional complexity. Government is both regulator (through BTP) and sole shareholder.

“When a company is in need, like TelEm, which needs assistance, it’s very common to go to the Shareholder,” Hato explained. “In our case, it’s more complicated because our Shareholder is the government of St. Maarten and that becomes very political.”

He compared this to private competitors who can directly access shareholder funding. TelEm has submitted a “Quick Scan” to government and is awaiting a response on possible assistance.

(In Part 2, the article will address TelEm’s services, customer complaints, and competition.)