Tricom in Trouble

Is very sad to see our beloved country go down..

mondongo said:

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The only local DR compnay that issues commercial paper (that i'm aware of,not talking about multinationals) that is listed in the NYSE is Tricom (ticker symbol TDR). Standard and Poor just donwgraded their commercial paper to "junk" status. If you look at their financial statements, you'll understand why. They have US$500MILLION in debt, have very poor cash flow....and in their income statement show "ZERO" for Research and Development (lie). Basically what this means is that they have a pretty good chance of defaulting on some of their debt.

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I posted this analysis May, 2002 in response to a question about using retirement money to buy commercial paper. Tricom has been rotten for a long time. I'm sure that Dunce-on-a-Stick has exacerbated the problem, but let's put most of the blame on Tricom's execs and the Dominican system's (or lack thereof) of business law that supports these sorts of thieves.

Tricom has been in trouble for a long time. They spent millions of dollars trying to enter in the Panama market which went downhill. Their revenues have been decreasing quarter by quarter and they let new competitors eat their market share. Orange and Centennial did create a hughe hole to TDR. It's sad, but now we have to face reality.

I agree with GRS. If you chart this stock, you will see that it has been in a steady decline over the last few years. As with American telecommunication companies, Tricon probably over-invested in anticipation of exponential growth which never materialized. And now they find themselves saddled with high interest debt that they can't pay. As much as I like to blame things on Hippo, I will give him a pass on this one.

Good points, Porfio. If you look up Tricom in the sec.gov website and wade through Form 20-F, you will find some really interesting stuff:

1) MANUEL ARTURO PELLERANO PENA basically owned Tricom. He was Chairman of the Board, President and CEO. In the USA, CEO's are not on the board. The board is supposed to act as the boss of the excecutives. Conflict of interest number 1.

2) MANUEL ARTURO PELLERANO PENA owned millions of shares in Tricom. We know, then, what his objective was at Tricom: get the stock price up.

3) Tricom: owed US$35million in back taxes to the DR. It was being collected.

4) MANUEL ARTURO PELLERANO PENA was also President of Bancredito.

5) MANUEL ARTURO PELLERANO PENA was chairman of a company called GFN. I believe GFN gave unconditional financing to Tricom through Bancredito. (this part was not in the sec website directly, just my deduction).

6) Tricom: their short term operations were being financed with short term DR paper with interest rates in excess of 32%.....which they could not pay.

BOTTOM LINE: no one but Bancredito would loan them money because it looks like a big ponzy scehme by Mr MANUEL ARTURO PELLERANO PENA. This guy is good. wow.

Porfio, I will look at Telmex for a comparative analysis.

Mondongo, you have several companies listed that Mr Pellerano controls (or controlled), but forgot the BIGGEST one - Segna Insurance, which is the largest insurance company in the DR, and was the umbrella for all of the other companies.

This may seem like a switch...

...from the macro to the micro but please bear with me.

I am a Tricom customer, and my cellphone was blasted by a high voltage surge last night as I was recharging it. Tricom said it would have to be replaced, but - wait for it - no handsets are available and they can't say when they will have them. Great.

Next stop, internet cafe because the power surge has also totalled the inverter and there is no power at home. The connection is so slow as to be nonexistent. I sent an urgent e-mail and tried to look at the DR1 forums but gave up after 15 minutes. Anyway, the guy in charge told me he was sorry (as I handed over my RD$25) and said it had been like that for several days now... Tricom... my point is, is their abysmal service at client level a reflection of a company about to go over the edge?

Whatever it is, tomorrow I start comparing cellphone deals from the other companies.

Chiri

Well, I agree with Porfio. If the peso had not devaluated nearly 250% in the past couple years, this thread would not exist. When Tricom has to pay back loans in American dollars with the peso at nearly 40:1 to equal 1 U.S. dollar, it cannot get ahead of the curve.

I notice that nothing has been mentioned about the cable company Tricom bought 2 years ago. The problem is not cash flow with Tricom, it's the fact their internal cash flow is generated in pesos. Arturo Pellerano has been in my estimation a competent executive. But, he cannot control the peso valuation. Regretfully, unless the economy would have a complete turnaround, I do not see Tricom getting out from under their $500 U.S. million debt.

A YES FOR DOLLARIZATION>>>>>>>>>>>>>>>>>>>>>>>>>>

A dumb question

Once this country get dollarized what are going to do for a living those here in RD receiving US$ from the USA and exchanging here for devaluated pesos and buying things with them at very attractive prices?

While there may be different opinions on Tricom and its excecutive, theere is only one set of facts. The fact is that devalutaion did not become material until the spring of this year. The fact is that they were already in trouble. Read the sec.gov website and you will find that they admit in their calemdar year 2002 annual report that they were nearly insolvent.

It was not devaluation that sent this company down the tubes. Devaluation just happens to be the excuse that they are selling and some are buying. Look at the stock price and see what happened from May of this year.Compare it to ANY other telco. It was just about the worst.

What is relevant about May,2003? That is when their fiscal year ending Dec 31,2002 annual report was filed with the SEC. In other words, that is when a lot of investors found out how deep in manure this company had been.