Long-running BTC privatisation delayed…again

11 Jun 2010

Bahamian Prime Minister Hubert Ingraham has said his government is in no rush to sell a 51% stake in Bahamas Telecommunications Company (BTC), and would rather take its time finding a buyer and ensuring that the process goes right. ‘It takes a while for some things to be done, especially if you want it done properly. We do not have to sell today or tomorrow. We would like to do so when it is beneficial for The Bahamas and whenever that comes we will be happy,’ he told reporters.

According to GlobalComms Database the process of priming BTC for privatisation was initiated in 1998 when the company’s workforce was cut by 50% and consultants were engaged to advise on the sale of part of the government’s stake. Progress was slow, but in early 2003 the government announced that it would sell a 49% stake to a ‘strategic partner’. Three parties expressed interest in the sale – TransWorld Telecom, BahamaTel and Bluewater Ventures – but by May all but the last, a private equity firm backed by John Gregg, a former top executive of British cableco NTL, had pulled out. With just one interested party in the frame the government engaged in some prolonged heavy bargaining, but no deal was forged, leaving the government with no option but to put the entire process on hold.

The issue was not dropped altogether however, and in November 2005 the then-prime minister Perry Christie was reported as saying he remained 100% committed to the telco’s privatisation, though he stopped short of giving any intended dates. In January 2006 the Minister of State for Finance was quoted as saying that government officials were ‘in discussions’ with an interested party. Although nothing official was made public, it was rumoured that the Christie government had given the nod to a BHD260 million (USD260 million) deal with Bluewater for the 49% stake, of which BHD220 million would be paid up front, BHD35 million would be paid in five years time, with a final BHD5 million due a year later. However, it soon became clear that Bluewater was only prepared to pay BHD260 million if BTC was guaranteed an extension of its wireless monopoly for a period of between five and seven years (with MVNOs permitted to enter the market after three years), and if it was given a commitment that the company would be permitted to offer pay-TV services once Cable Bahamas’ exclusivity ended in 2009.

Not surprisingly, the issue of extending BTC’s monopoly proved extremely contentious, and once again became subject to political debate. In May 2007 Hubert Ingraham’s opposition Free National Movement (FNM) party won parliamentary elections, ousting the Christie government. Ingraham later said he had no intention of ‘offering credit’ for the purchase of BTC (referring to the BHD35 million Bluewater promised after five years), further casting doubt on the proposed deal. In July 2007 the Bahamas Communications and Public Officers Union (BCPOU) announced it remained committed to the privatisation of the company, endorsing Bluewater as its preferred strategic partner, but this appeared to have little impact, and the privatisation issue faded from the headlines for the rest of the year.

March 2008 saw the government establishing a nine-member BTC Privatisation Committee to advise on the process, tasking the new body to conclude the process by the end of the year. The committee quickly appointed KPMG Corporate Finance to advise on all aspects of the sale, including preparation of BTC for privatisation, its valuation, and regulatory and legal revision of the wider telecoms market. Citi Group of New York was retained to identify possible buyers for a 51% stake, the government having finally taken the view a majority shareholding would be more attractive to investors. Despite being given the end-year deadline, once again the process was delayed. In December 2008 the committee chairman said that the privatisation was ‘underway’, with a number of potential buyers interested, but tempered the optimism by adding that the timing of the sale and the depressed nature of the world market should not be allowed to undermine the fair market value of BTC.

Bahamas, Bahamas Telecommunications Company (BTC),

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