Tuesday, November 6, 2012

Is 1-Gbps a "Hail Mary Pass"for Burlington Telecom?

Financially troubled Burlington Telecom, a municipally-owned communications provider, has decided to sell 1-Gbps Internet access services. 

The symmetrical 1-Gbps service will sell for $150 to $200 a month. The issue at this point is whether the new superfast access is capable of turning around revenue enough to stave off a financial collapse. 

A 2010 study concluded that “BT is not viable in relationship to its current debt load of $51 million and its ability to generate earnings to repay this debt."

"BT cannot meet its principal and interest obligations at this time,” the study concluded, noting that the company’s current business plan can’t meet future financial challenges either.

An agreement with pirmary lender Citibank in March 2012 stipulates that the first 60 percent of BT profits are to be paid to Citibank, which means taxpayers now are second in line to protect their investment. 

At current rates, it will take 96 years for BT to pay off the Citibank loan. 

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