$12.2 million, representing $6.15 per share, on revenues of nearly $55.8 million in the year to March 31.

The monopoly's chairman and president, Dr. James King, reported to shareholders that revenues were up almost nine percent and profits were up 12.7 percent and the demand for services continued to grow, especially in the business sector. The number of new cellular customers grew 55 percent.

But he complained that the company's corporate tax rate was "quite a demanding financial obligation'' at 34 percent.

Telco paid $6.3 million in taxes and import duties last year, what Dr. King termed a "growing financial commitment''. That included a three percent government licence fee of gross revenues that amounted to $1,673,000 for the year to March 31, compared to $1,536,000 for the previous year.

The company still intends to spend $15 million this year in modernisation after reinvesting $12.6 million or 23 percent of its revenues back into the plant during the last fiscal year.

The company has spent more than two million dollars since 1994 determining the commercial and technical feasibility of introducing a large scale "Fibre to the Home'' (FTTH) facility, connecting some 78 homes and other premises on a trial basis that is being continued until the end of the calendar year, before a decision on its future is taken.

The FTTH system from Belgium is just one aspect of Telco's investment in broadband technologies.

Dr. King wrote: "As a result of further technological developments in North America and Europe, and regulatory issues, the company has deferred the video-on-demand aspect of the FTTH facility.'' But the company moved to heavily invest in Bermuda Cablevision, saying that the substantial stake would allow fuller utilisation and control of services offered through FTTH, as well as expand potential sources of new revenues and growth opportunities.

But Dr. King states: "Even though the company does have 51 percent of the issued share capital of Bermuda Cablevision Ltd., it does not have control.

"The structure of Bermuda Cablevision Ltd., as it pertains to the local 60:40 ownership rule, is being challenged through the Bermuda courts.'' This year Telco launched an on-going, in-house assessment and restructuring operation with the help of Boston-based Dartmouth Research & Consulting. The results of the restructuring and re-engineering programme are expected to emerge in the latter half of this fiscal year.

Shareholders at the company's annual general meeting on Friday will already be aware of an upcoming $0.55 per share cash dividend declared by the company, and announced yesterday for shareholders of record July 3, to be paid on July 14.

Financial highlights for the year show that the company made $24.4 million from 8,411,513 overseas calls in the year to the end of March, more than $2,000,000 more than the year before.

Their sales from 81,182,308 local calls was $11.1 million and they had revenues of $9.65 million in access charges and $8.64 in equipment rentals, together with "other revenue'' of some $2,000,000.

Financial statements show with total revenues of $55,766,181 and total expenses of $44,566,540, net operating revenue is $11,199,641. About half of those expenses, $22.2 million were for salaries, wages and benefits, including the total pension plan expense of $2,616,000.

Together with other income of nearly a million dollars, net earnings amount to $12,179,019.

Shareholders' equity is $88,349,974 or $44.59 for each of the 1,981,405 issued shares.

The publicly listed company was incorporated in 1887 with 93 percent of the issued shares owned by Bermudians. The firm employs an almost totally Bermudian staff of 401.

TOP MAN -- Telco's chairman and president, Dr. James King.