Six months after Call-Net Enterprises Inc. eliminated $2 billion in debt, another major competitive local exchange carrier is trying to reach an agreement with its creditors on “”restructuring”” its debt.
AT&T Canada Corp., which
owes more than $4.5 billion to bondholders and banks, has been in talks with an “”ad hoc”” committee representing creditors that hold over 60 per cent of its debt.
Company officials have not given any specifics on how exactly they want to restructure the debt or whether they want a deal similar to the one reached last April by Call-Net, in which the company’s creditors got mostly stock in lieu of repayment.
During a conference call Tuesday, the carrier’s vice-chairman and chief executive officer, John McLennan, said he hopes to reach an agreement with creditors by the end of this year.
AT&T said late Tuesday it lost over $1.3 billion during the quarter (due mainly to write-downs in property, plant and equipment) ending June 30 and had to pay $106 million in interest.
The company expects the Canadian Radio-television and Telecommunications Commission’s (CRTC) recent price cap decision will cut costs by up to $20 million this year, but McLennan said the regulator has “”overstated”” the benefits of the ruling.
AT&T may appeal CRTC decision 2002-34, issued May 30, which limits the amount that incumbent local exchange carriers (ILECs) can charge CLECs for “”essential”” services to 15 per cent above cost. Before May, the markup was 25 per cent.
McLennan said the price cap ruling will cut its spending on wholesale services by under ten per cent, rather than by the 15 to 20 per cent that the CRTC estimates.
The CRTC announced last Friday it plans to review the features that are included in competitor digital network access (CDNA) services.
“”We still believe the regulator fails to appreciate the true state of imbalance in the telecommunications industry in Canada,”” McLennan said. “”We continue to seriously consider an appeal of the CRTC decision.””
He added the company will decide by the end of the month whether it will appeal, and will base the decision on how well the price cap regime reflects Industry Canada’s policies on telecom competition.
“”We’re fairly concerned the CRTC has the impression it can micromanage the rollout of competition and investment in Canadian infrastructure by dictating which telephone company facilities should be available to competitors at some special cost base prices, and which ones are not,”” McLennan said. “”It’s all very arbitrary to us.””
McLennan said he’s concerned about the time it will take to make a decision, because the regulator plans to hold hearings between this month and next spring, and will not issue a final decision until the end of 2003.
“”A year and a half is a lifetime in this industry,”” he said. “”Why they’re taking that amount of time, after all the information that’s been submitted, really does confuse me and frustrate me, but at least they’re willing to look at it.””
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