The State's third biggest fixed line telecommunications operator, MCI WorldCom Ireland, lost €116.8 million in 2002, following the bankruptcy of its US parent.
The Dublin-based company also experienced a 10 per cent dip in turnover in the year that its US parent, WorldCom, became embroiled in one of the world's biggest financial scandals to date.
MCI WorldCom, which supplies telecoms services to companies which include An Post and Aer Lingus, saw its 2002 revenues fall to €31.2 million, down from €34.8 million a year earlier.
New figures filed with the Companies Registration Office show a weak operating performance in 2002 was compounded by exceptional write-off charges worth more than €110 million.
These exceptional charges incurred by the company turned a €623,439 pre-tax profit made in 2001 into a €116.8 million loss for the year to the end of 2002.
Following a review of the company by its new auditor, KPMG, MCI WorldCom recorded a once-off charge worth €66.7 million relating to the impairment of its telecoms network and other assets. The re-statement of the value of MCI WorldCom's telecoms assets and network reflects similar once-off charges incurred by other telecoms firms following the decline in the telecoms market between 2001 and 2003.
MCI WorldCom was also forced to make a provision for bad debt owed to it by its US parent and other WorldCom subsidiaries following the group's bankruptcy filing in 2002. The Irish subsidiary has taken an exceptional charge worth €45.9 million to cover bad debts due from its parent and other subsidiaries which are still under Chapter 11 bankruptcy protection. An MCI WorldCom spokeswoman said the asset write-down was expected and did not affect the way it operated or served its customers. She said the telecoms firm had achieved significant success in retaining and growing its local customer base in Ireland.
The financial accounts show MCI WorldCom was able to cut its operating costs in 2002 to €20.8 million, down from €22.7 million in the previous year. Its cash reserves stood at €2.79 million on 31st December 2002, up from €1.05 million a year earlier.
At end December 2002, the firm had net liabilities of €108.7 million, up from €2.1 million at the same time in the previous year.
Average staff numbers at MCI WorldCom fell to 155 in 2002, down from 178 a year earlier, following a restructuring process.
Meanwhile, the accounts show the Irish firm must meet deadlines for becoming cashflow positive under the terms of loan covenants agreed between it and a WorldCom Group subsidiary.
A note in the Irish firm's financial accounts outlines that the WorldCom Group can withhold operating funds held in trust for its European subsidiaries if any of them fail to become cash flow positive by the end of 2004.
The WorldCom Group, which changed its name to MCI following its 2002 bankruptcy filing, recently disclosed that it expects to emerge from Chapter 11 protection within weeks. It was forced to file for bankruptcy protection when it was implicated in a multi-billion dollar accountancy fraud by federal prosecutors. Four mid-level executives at the telecommunications giant have since pleaded guilty to criminal fraud charges and have agreed to co-operate with the US government.
Next month WorldCom's former chief financial officer, Mr Scott Sullivan, is due to appear in court in the US. A fraud case against WorldCom's former chief executive, Mr Bernie Ebbers, is expected to proceed following Mr Sullivan's trial.
