Advisers at Interpath, who are attempting to rescue the company, said in a recent filing that they had struggled to locate millions of pounds.
In a report to creditors, they have said they were previously told that the company held more than more than $19m (£15m) in its bank account.
However, they have now uncovered that the business accounts were almost empty.
Interpath’s Jonathan Thielmann and David Standish said: “Statements show the balance as at the date of our appointment was $1,500 and the account balance was never greater than $4,000.”
Erm?
Despite reporting revenues of $677m last year with just 50 staff, Bank of Telecom collapsed two months ago.
The business now owes around £36m to lender Investec, as well as millions of pounds more to other debtors.
The administrators said Bank of Telecom’s accounts revealed that £95m remains owed by its mobile customers.
However, given they are largely overseas networks, the advisers said they had encountered significant difficulties contacting them.
The advisers added: “None of these large debtors have paid or communicated a readiness to pay.”
In the company’s filings, one director of the company said he had “lost confidence in the reliability of information emanating from the finance department”.
Sounds like Investec never did actually check the bank accounts before lending…..
There is an alternative explanation:
Bank of Telecom, which claimed to allow the trading of SMS and voice traffic between mobile companies,
Vast trading at tiny or even negative margins but the cashflow impressed?
And people laugh when I say limited companies allow blatant fraudulent behaviour……….
It does seem a good rule of thumb. Anything in telcom is dodgy.
What did Investec think it was doing lending money? It is supposed to be investing in the equity which has upside risk not loans which only risk going down.
Accounts receivable…or not.
Whenever I got involved in due diligence in the telecoms industry it was very thorough and very expensive. On one project we had 2 x £800+ a day engineers driving round a large country counting equipment at mobile and other sites. That’s on top of the management consultants and a few of us pouring over business cases. That was over 25 years ago.
I should had added there was also included the lenders’ staff doing whatever they did, which included actually going to banks.
Did the cash flow impress? The value of voice traffic has been trending towards zero for the last 20-odd years. Or to put it another way, bandwidth used to be eye wateringly expensive and is now insanely cheap.
Remember 20 years ago you were doing well if you could get 2MB/s broadband to your house?
And now you can get 20 MB/s or more on a cheapo Android phone using last gen 4G on an all you can eat contract for £20 a month. And that’s the Aldi basics poverty option, 5G is obviously much faster and so is BT fibre, Starlink and Jeff Bezos’ forthcoming global satellite broadband constellation.
There used to be an entire subsector of the IT industry dedicated to bandwidth optimisation, selling big expensive boxes to enterprise customers. That’s as old hat now as trying to fit a computer game into 128K of ZX Spectrum+2 memory.
We have more bandwidth than we know what to do with now. Pretty good, this market competition stuff, eh? But you don’t want to base your business around (re-)selling a commoditised product, fuck all margin in it.
‘. . . . largely overseas networks . . . ‘
Ah. I think I might be able to see what happened here . . . .
Again.
llater,
llamas
Will the Masters of the Universe @ Investec pay for this fuck up with their jobs (and never be employed elsewhere again)?
If not, it’ll be like lessons learned in the public sector…
So, they were lending to networks in foreign countries.
No ability to check that the loan conditions were as advertised (do you actually have the permission to put towers up where you say you do? etc.)
Very limited ability to force delinquent debtors to pay up.
Those receivables should have been discounted by quite a bit more than they were, I should think. Could they actually have been resold at all? Or would any (actual) accountant have looked at them and run screaming?