Basic Math for TNCI

Peter : On Rad's Radar?
| Peter Radizeski of RAD-INFO, Inc. talking telecom, Cloud, VoIP, CLEC, and The Channel.

Basic Math for TNCI

TNCI (Trans National Communications International) filed for Bankruptcy in October of 2011, owing Sprint ($5M), AT&T ($1.66M), Verizon ($1M) and Qwest ($1.9M). VZ and AT&T have liquidated CLEC's before for less than $2M. I'm not trying to be pessimistic here, but realistic. Commpartners was liquidated for less than $2M and AstroTel was forced to sell for less than $1M.

Other debt includes Citizens Bank of Massachusetts with a secured claim of $4M and USAC for $1.3M (that's USF funds they collected and did not pay to the government).

TNCI filed a reorganization plan, according to Channel Partners. This is where Basic Math skills act like a fan to the smoke. "In financial statements filed with the court, TNCI projects 2012 total revenues of $73.3 million. Of its projected $60.2 million in total direct costs, TNCI anticipated that agent commissions will account for nearly $8.3 million in costs." First off, $73M - $60M - $8M = $5M left over to run the business and pay back debt. Payroll, benefits, rent, utilities for a CLEC for less than $5M per year in Boston. Out of that $5M they have to pay back the secured debt to the bank and the USF money to USAC - a total of $5.6M. That's lean. That's the kind of math skills that got them in BK to begin with.

There is also the question of the commissions. At a standard rate of 15% on $73.3M, the commission payments should be $11M not $8M.

I just don't see how this works out for the 600+ agents. The customers will be fine either by going direct to the underlying carrier (who wants to recoup losses and maintain revenue streams) or moving to another carrier. Hopefully, agents are working on that now.

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