JT contributes £17 million to Treasury despite fall in profits
JT paid £17 million into the Island’s coffers last year amid rising operating costs and significant investments both locally and internationally.
The telecoms group, which is wholly owned by the States of Jersey, said it paid £17m in dividends, corporate and employee taxes and GST, despite profits after tax falling to £2.2m – a drop of more than half on 2017.
The fall in profits follows a steady decline in recent years, with 2015 seeing a £12m profit (before a one-off pension charge), 2016: £6m and 2017: £4.8m. It reflects the tougher competitive environment in Jersey, as well as rising costs and investments into major capital projects.
However, Graeme Millar, JT chief executive officer, said that the company still paid an almost identical figure of £17m to the States as in the previous year.
JT is tackling the local market challenges by investing in its international businesses and they helped push gross profits up last year, with the group expecting significant expansion in its international revenues in the coming years.
Mr Millar said that the costs to complete the fibre roll-out in Jersey came in on budget, but operating costs had risen. ‘We’ve had several extra costs; accounting standards have recently changed and so we’re having to spend some money on changing our accounting systems to meet the latest standards,’ he said. ‘We are investing in our future, our growing business. So we spent money on the business that we bought in Denmark this year, and various other investments both on Island and off Island.’
The most obvious on-Island investment in recent years has been the gigabit fibre project which JT started in 2012 and completed last year. It’s put Jersey onto the world stage in terms of connectivity, as well as benefitting Islanders. However, investments into international businesses are also bringing positives for local customers, particularly with the Internet of Things where JT sims are now being used by millions of internet connected devices worldwide and the company has negotiated 527 separate roaming agreements.
Mr Millar said it had resulted in JT being able to significantly cut roaming charges for its local customers, but that meant a drop in local revenue.
He added: ‘We’ve reduced our roaming charges by about 95% so although we are not in the EU, our roaming charges are quite close to, although still a little more expensive than, roaming charges if we were an EU operator. That cost us many hundreds of thousands of pounds, almost running into the millions.
‘This is spending money on improved customer service and what customers want. The other thing is last year, we did a big push to introduce unlimited broadband for customers, and now almost half of our Jersey customers have unlimited broadband from JT. That was an important thing to do. It was a competitive thing to do in the marketplace. But it wasn’t a cheap thing to do.’
Mr Millar wants to eventually cut roaming charges to the same as within the EU and get all customers onto unlimited broadband, ‘It’s not just that we’re trying to balance improving the value for money for our customers, improving the customer experience and reinvesting in the future of the network and things like 5G; we want to also increase the dividends and the share of money that we pay back to our shareholder.’
- Graeme Millar and JT’s international business, will be the subject of the Wednesday Business Brief interview on 1 May.