By “there was a time where they were the shit” I’m assuming you are referring to a time when they were a department of the city run by Mr. Bruce Kerr and the public owners were kept informed by regular reports to council. This all seemed to change in 2005 when the former Mayor and council spun off the assets of City Tel and then sprang the following surprise on the citizens of Prince Rupert.
[quote=“Mayor Herb Pond”]
For Immediate Release: August 11, 2005
CityTel becomes independent and expands service in northern BC
Prince Rupert telecommunications company acquires Monarch cable systems
Prince Rupert, BC – CityTel announced today its independence from the City of Prince Rupert with a new entity and name – City West Group of Companies – and that City West has reached an agreement to acquire the northern British Columbia cable business and assets of Monarch Cablesystems Ltd. The $23.5 million transaction will close August 31, 2005.
“This is an exciting time for the people of northern British Columbia,” said Prince Rupert Mayor Herb Pond. “Northerners are now being served by a truly local telecommunications and cable company. The acquisition means that customers in our region will soon be receiving the same advanced cable and telecommunications services as those south of us.”
Formerly a City department providing telecommunications to Prince Rupert, CityTel’s assets have now been transferred to the new, independent entity City West Group of Companies. This group includes City West Telephone, City West Cable, City West Mobility and City West Fibre. The City of Prince Rupert is the sole shareholder of the City West Cable & Telephone Corporation, the holding company for the City West Group of Companies.
Monarch’s systems expand City West’s service area from Prince Rupert to Terrace, Kitimat, Smithers, Houston, Hazelton, Telkwa, Port Edward and Stewart. This move also increases City West’s subscription base from more than 15,000 to approximately 27,000 customers. City West expects to reach gross revenues of $30 million before 2010.
“We are committed to creating better service for northerners,” said Mayor Pond. “Prince Rupert is leading the region’s way onto the transportation corridor and the information highway.”
City West proposes to undertake an extensive capital program over the next five years to achieve its objective of a fully integrated digital communications environment in northwest BC, delivering a portfolio of voice, data, video and Internet services throughout the region. One of these plans is to construct a fibre optic link, connecting Prince Rupert with Terrace, to capitalize on existing business opportunities including the Port of Prince Rupert expansion. Financing for the acquisition and fibre optic link is being provided by HSBC, the world’s second largest bank.
City West Group of Companies and its predecessor CityTel have been providing telecommunications services to the residents of Prince Rupert since 1910. City West Telephone, City West Mobility and City West Fibre will be the only independent, municipally owned telecommunications companies in Western Canada. This acquisition also makes City West Cable the primary cable service provider in BC’s northwest region.
For more information, please contact:
Mayor Herb Pond
City of Prince Rupert
At the same time We were given the following answers from city hall when asked how the purchase of Monarch could proceed without a public referendum for the $23.5 million price tag;
[quote=“Victor Kumar (Former City Administrator)”]
How can the City afford to pay $23.5 million when it is already in debt?
City West, not the City of Prince Rupert, is purchasing Monarch assets with financing obtained from HSBC. The City of Prince Rupert is only a shareholder of City West, and as such the City is not guaranteeing the debt of City West and is not liable for the debt of City West. There is no impact on City services and property taxes arising from this transaction. City West is now a separate entity from the City. The debt is that of City West. If City Tel continued as a department of the City, this transaction would not have been possible.
Isn’t the City required to hold a Counter-petition/referendum for the borrowing of such large amount of money?
Yes, if the City was the borrower. The City is a shareholder only and is not liable for the debt of City West Cable & Telephone Corp. City West is a public company and requires no referendum other than the consent of the Shareholder by a resolution. City West is not binding the shareholder. The debt is guaranteed by the income and assets of City West.
What is the future Revenue of the combined Company?
The 2006 combined income is projected at $19.2 million and rising to $29.5 million in 2010.
What Income can the City expect?
In 2006, the Earnings Before Interest Taxes Depreciation and Allowances [commonly referred to as EBITDA] is projected at $8.1 million rising to $16.2 million by 2010. The interest charges in 2006 are projected at $1.7 million and decreasing to $917,000 in 2010. Net Income of the Company in 2006 is projected at $1.2 million; 2007: $3.0 million; 2008: $5.2 million; 2009: $7.3 million & 2010: $9.4 million.
What does the Cash Flow position looks like considering that the City has no money?
The City’s cash flow remains poor. It is not related to City West Cable & Telephone’s cash flow, which will be independent of the City. The operating cash flow increases from $6.2 million in 2006 to $14.4 million in 2010. Cash flow will be impacted by the extent of capital investment required to improve the system.[/quote]
Well folks it’s now almost the end of 2010, and maybe it’s time we asked whether the management of this company under the Chair Mr. Gordon Howie and the CEO Mr. Rob Brown has achieved all that was promised. Lots of questions may come to mind but lets start with
- Have we actually seen that "The acquisition means that customers in our region will soon be receiving the same advanced cable and telecommunications services as those south of us.”?
- Have we actually seen that "“ “Prince Rupert is leading the region’s way onto the transportation corridor and the information highway.”?
- Have we actually seen that “There is no impact on City services and property taxes arising from this transaction.”?
- Has the company achieved the financial projections made: “Net Income of the Company in 2006 is projected at $1.2 million; 2007: $3.0 million; 2008: $5.2 million; 2009: $7.3 million & 2010: $9.4 million”.
- Should a municipality that can’t provide the Recycling service their citizens desire be competing with “Big Boys” in an industry that has lots of competition all with more money than Emperor Jack and his Imperial Court.
I know that accountability is a foreign concept to our local City Hall but perhaps it’s time for taxpayers to start demanding this. The city administrator Mr. Victor Kumar obviously had a business plan and financial projections up to the end of 2010. Since this is all now history, perhaps the City can release the original projections to the citizens so they can assess for themselves the wisdom, risks or benefits of remaining in the telecommunications business.