GUAM UTILITY SALE COST TAXPAYERS $11 MILLION

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By Gene Park

HAGÅTÑA, Guam (Pacific Daily News, Jan. 25) - To achieve the $150 million sale of Guam government’s Guam Telephone Authority, about $11 million had to be spent to get it in the first place.

According to an audit from the public auditor's office, around $10.9 million was spent in a five-year span in the privatization effort of what once was the nation's last government-owned local exchange carrier.

Since being sold to private company TeleGuam Holdings, the audit is the last financial audit for GTA. However, the report stated, the agreement with TeleGuam requires certain accounts to be audited as of March 31 and June 30.

Almost half of the total amount was used in fiscal 2002 under former Governor Carl Gutierrez's administration, with about $5.5 million spent for privatization efforts that year.

That year saw an unsuccessful privatization effort with an unqualified bidder. A request for proposals yielded one bidder: an Illinois holding company called Teleblu Inc.

In the end, Teleblu was found to be out of compliance with the legal requirements for the sale. At the time, the company had neither gross annual sales of $500 million nor a net worth of $100 million -- both qualifications under local law.

Selling the Guam Telephone Authority was successful last year when TeleGuam was named the winning bidder. The turnover was completed at the beginning of this year.

Among other highlights from the audit report was a $4 million increase in operating revenues, with operating expenses decreased by $2 million.

Overall, GTA had a $2 million loss in net assets, but it was a significant improvement from the prior year's $10 million loss.

GTA's cash increased to $16 million -- an increase from fiscal 2003's $9 million. The report states GTA attributes the increase to delays in procurement and completion of capital projects. The money will be used for capital improvement purposes.

January 26, 2005

Pacific Daily News: www.guampdn.com

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