1992 -- an increase of 8.1 percent on the year before.

Once again, revenues from overseas phone calls provided the backbone of Telco's performance, bringing in $20.5 million -- just under half the company's total operating revenues of $46.5 million.

Although revenue from foreign calls was up 5.7 percent, compared with an 2.4 percent for the previous year, this was still far below the growth rate of the late 1980s, said Telco's president Mr. Colin Young.

One of the biggest growth areas in the 12 months to March 31, 1992, was in the area of cellular telephones, which more business people are starting to use.

More resources would be pushed into upgrading the service and technology over the coming months, said Mr. Young.

He added: "The demand for cellular radio service has again been outstanding, but this demand has taken the existing equipment to the maximum level of its capacity.

"The equipment will be upgraded during 1992 and this will move the service from the current analogue status to a digital/analogue technology with enhanced capacity and technology.'' Telco struggled to maintain its costs in line with inflation, with its operating expenses growing by $1.9 million (5.3 percent) to $38.1 million.

Mr. Young said controlling expenses was made more difficult due to a negotiated seven percent wage increase for hourly paid employees and an arbitrated settlement for unionised clerical staff which amounted to a 6.5 percent increase in pay.

"In a year when expense control was of the utmost importance, significant pressure was placed on expenses by these settlements,'' he said.

"To offset these high wage and salary increases, the company found itself in the difficult position of having to generate substantial additional revenue in order to maintain similar profitability.'' Mr. Young said he was encouraged by the revenues from local services, which rose from $7 million to $7.65 million.

Other major areas of revenue were: equipment rentals, $8 million; access charges, $7.

6 million; and connection charges, $1.8 million.

The most significant drain on expenses were: salaries and employee benefits, $19.3 million; plant depreciation and retirements, $7.8 million; maintenance, $4.5 million; Government taxes, fees and levies, $3.36 million; and general and administrative costs, $3.1 million.

Net operating profit for the year was $8.38 million, up nearly ten percent.

Investment income, rental and other income came to $985,387.

Telco's share price on the local stock market held steady, while the net book value of each share increased from $31.76 in 1991 to $34.69 at March 31, 1992.

Dividends were the same at $1.80 per share, which represented a payout ratio of 38 percent on net income.

Mr. Young said there had been a general improvement in Telco's response time to customer requests for repairs and installations. He was optimistic about the future.

"Despite the ongoing economic difficulties existing in Bermuda and around the world during the past year, the company managed to obtain a stable level of earnings,'' he said.

"Even though the economic outlook remains uncertain, I'm confident that the company is well positioned to meet the challenges which will face it in the year ahead.

"Our planned developments in telecommunications are continuing and these, along with the further deployment of fibre optics, will ensure that the company retains its position as a technological leader in the exciting arena of telecommunications.'' 1992 ANNUAL RESULTS OF TELCO PROFIT $9.37m; OPERATING REVENUES $46.5m; OPERATING EXPENSES $38.1m; RETAINED EARNINGS $34.8m; ASSETS $75.8m; LIABILITIES $7.1m.