$11.7 million in the year ended March 31 from the $7.4 million recorded in the previous financial year.

The company made a profit of about $12.2 million in the 1995 fiscal year. The decline in the 1996 fiscal year was mainly attributed to the $4.7 million cost in the ongoing reorganisation of BTC. The money was spent mainly on constancy fees, severance payouts and early retirement benefits. By the end of the 1997 fiscal year BTC spent a further $1.6 million on restructuring.

The company also appointed Lorraine Lyle as chief operating officer of BTC and as chief executive officer of the BTC Group of Companies. As part of the reorganisation the company split itself into three incorporated subsidiaries, BTC Services, BTC Mobility and BTC Telecommunications.

Previously the day-to-day operations of the company was left to chairman and president Dr. James King, who took over in 1995 when general manager Ernest Pacheco abruptly left the company for retirement after 42 years.

BTC's earnings per share in the 1997 fiscal year were $5.89, compared with $3.71 in 1996. Revenues grew 8.3 percent during the year ended March 31 to $64.2 million, with continued demand for services especially from the international business sector. Operating expenses increased by 7.6 percent to $52.5 million.

In his chairman's report to shareholders Dr. King attributed the increased expenses to the reorganisation and the "changing environment.'' The company's monopoly of the local telecommunications market was effectively ended last year when Government granted licences to two companies -- North Atlantic Telecommunications Ltd. and Bermuda Digital Communications Ltd.

North Atlantic is gearing up to compete for BTC's customers in Hamilton, while Bermuda Digital plans on competing for the company's cellular market.

TeleBermuda International Ltd. competes in the long-distance market with Cable & Wireless PLC.

"There is still uncertainty resulting from the evolving regulatory environment and we are concerned that the same level of urgency given to the opening of the market has not been applied to the establishment of a level playing field,'' Dr. King stated in the annual report. "Having introduced competition, it is incumbent on all stakeholders to ensure that the process is successful.'' Dr. King was perhaps referring to BTC's continued rate supervision by the Telecommunications Commission to ensure that there is no price undercutting of its rivals during the early stages of competition.

He also stated that consumers should expect the gradual removal of the price subsidy of domestic services by revenue BTC earned from channelling overseas traffic through to the two international carriers.

"Our studies have shown that the costs of providing access and leased line services are far in excess of the revenues received from them,'' he stated.

The company spent $14.2 million on capital expenditures, primarily on the expansion of its cellular network and improvements in the central office switching locations.

On March 31 the company issued a 7.75 percent 15-year note valued at $15 as a special dividend to shareholders in a bid to bolster its share price in relation to book value. The amount of the issue $15 added to the last traded share price of $26 gives shareholders a value of $41, closer to the book value of about $46, a company spokesman said.

Prior to the company making the announcement in February of the proposed issue, BTC's stock was trading at $30.25.

BTC had 406 employees at March 31, a gain of 26 over the previous financial year. Spokeswoman Karla Lacey-Minors said the additions were due to hiring for positions that had either not been filled or had been newly created during the restructuring.