OLDS — The Town of Olds will very likely have to pump a “cash injection” of $250,000 into O-NET later this year, O-NET chair Darren Wilson said.
O-NET, which is owned by the Town of Olds and is in partnership with Calgary-based FourNetworks and Nation Fiber Corp., provides high-speed internet, phone and TV service.
“It's very likely if not assured, an additional cash injection by the town of $250,000 will be required sometime in Q3 (the third quarter) or Q4 (the fourth quarter),” Wilson said during O-NET's annual general meeting (AGM).
However, a $400,000 project to upgrade and solve O-NET's TV service issues as well as efforts to position the company to sell its services to other customers will position it for growth, attendees at the meeting were told.
O-NET chief operating officer Matthew Anderson also said a sales and marketing employee has been hired “so that we can hit the ground running in the fall.”
The AGM was held June 27 in the Town of Olds council chambers.
Anderson said it’s hoped improvements to the TV service will be completed by the end of July.
As the Albertan reported in early spring, all the set-top boxes that provide the TV service now will be replaced and consumers will have a choice whether to remain with the set-top box service or obtain their TV service on any device they wish via an app.
Anderson noted that O-NET works with partners like FourNetworks in Calgary to provide its service.
“We're working with our external partners to get it accelerated as soon as possible. But we unfortunately rely on a lot upstream of us,” he said.
Anderson noted that over the past year, the central office’s hardware, software and overall staff function have all been revamped.
“There's a lot of other networks that we work with to deliver the TV service and we've done everything on our end in terms of implementing the hardware and software in the central office.” he said.
Anderson and Wilson said all that work and expense – including the upgrades to the TV service and negotiations with potential new customers in other communities -- will set the company up for growth.
Krystal Stoutenberg of Stoutenberg & Company presented the financial statements for Olds Fibre Ltd., (operating as O-NET) as of Dec. 31, last year.
In 2022, Mountain View Power revenue totalled $198,761, way up from $75,247 in 2021.
On the other hand, Mountain View Power expenses in 2022 totalled $151,423, far higher than $4,784 in 2021.
Income from Mountain View Power operations totalled $47,784, down from $70,463 in 2021.
Olds Fibre Ltd. revenues and expenses are substantially higher.
Assets were $917,471 in 2022. When other aspects are included such as deferred consulting costs, property plant and equipment, the total comes to $9.18 million compared to $10.67 million in 2021.
Amortization property, plant and equipment -- increased to $1,096,448 from $470,850 in 2021.
In an email to Wilson, he was asked why amortization rose to that height.
In his reply, Wilson said that’s because fibre cable assets were transferred from the Olds Institute for Community and Regional Development to Olds Fibre Ltd. in in the fourth quarter of 2021.
“The actual fibre cable was previously owned and reported as an asset by Olds Institute for Community and Regional Development. Olds Fibre Ltd. would then pay a fibre access fee to Olds Institute,” Wilson wrote.
In the financial statements, property, plant and equipment in question includes everything from computer and office equipment in the central office to systems outside the plant and “capitalized labour.”
The fibre cable is reported in property, plant and equipment as “network – outside plant.”
Wilson noted that in the financial statements, in the expense category “rental — fibre access” fell from $629, 620 in 2021 to $33,220 as a result of the transfer of ownership of the fibre cable assets noted above.
Wilson confirmed that OFL (O-NET) paid $1,074,101 in bank indebtedness and long-term debt payments.
“Bank indebtedness (line of credit) declined from $3,395,871 in 2021 to $2,895,622 in 2022, a reduction of $500,249,” he wrote.
“The current portion of long-term debt declined by $50,173, from $450,783 in 2021 to $400,610 in 2022. And the long-term portion of debt declined from $14,609,235 in 2021 to $14,085,55 in 2022, a reduction of $523,680.”
Wilson also confirmed that interest on long-term debt is $631,161 versus $226,120 in 2021. He was asked if that’s due to recent interest rate hikes by the Bank of Canada, the Canadian central bank.
“No. Interest on the long-term debt is at a fixed rate. The increase in long-term debt expense year-over-year is primarily due to the transfer of debt liabilities from the town (which assumed Olds Institute debt under the forbearance agreement) to Olds Fibre Ltd, effective Oct. 1, 2021,” Wilson wrote.
“Prior to 2022, debt payments on (the) Town (of Olds) guaranteed portion of debt were made by Olds Institute for Community and Regional Development (OICRD) and reported in OICRD financial statements; OFL is also responsible for servicing the operating line of credit.”
Wilson confirmed that if amortization is taken out of the equation, O-NET actually made a profit of $657,274.
“This would be referred to as earnings before taxes, depreciation and amortization,” he wrote. “Amortization is a non-cash expense.”
During the meeting, Wilson thanked O-NET'S “loyal customers for your patience and understanding.”
“We're all aware of the challenges you all have had,” he said.
“I’d also like to thank our employees who have cumulatively, over the past couple of years, persevered through a variety of organizational and operational challenges,” Wilson added.
“One of the hallmarks of O-NET, as we are all aware, has been and continues to be the white glove customer service from our loyal employees.”
Wilson, a town councillor, said the board of directors which oversees O-NET currently consists of himself, fellow councillor Heather Ryan and five community members.
At one time, the board consisted entirely of town councillors. In the first quarter of 2022, the process began to eventually replace them all with community members.
Wilson said by the end of this year, he anticipates that he and Ryan will be replaced on the board with community members, meaning council will no longer have representation on the board.
Editor's note: This article has been corrected to make clear that revenue, expenses and income mentioned in the article are for Mountain View Power and not Olds Fibre Ltd. The amount of the 'cash injection' the Town of Olds is expected to infuse into O-NET is $250,000 not the $50,000 the Albertan reported. As well, there are seven board members, not five and by the end of the year, all seven are expected to be community members.
