The Blue Telecom group Makes New Bid For The Bahamas Telecommunications Company - BTC

Blue Making New Bid For BTC

 

 

 

 

By Candia Dames

candiadames@hotmail.com

Nassau, Bahamas

29th November 2004

 

 

One year after it was kicked out of the race to purchase a minority stake in The Bahamas Telecommunications Company (BTC), the Blue Telecom group has made adjustments to its bid to try to meet the government's expectations and the reality of the existing value of BTC.

Blue's President Lindbergh Smith, in an interview with the Bahama Journal on Sunday, said his company still has the right ingredients to become the long-awaited strategic partner in the state-owned telephone company.

The Bahama Journal contacted him after Minister of State for Finance James Smith indicated that while there is no 'formal privatisation process' in place, the government is still open to favourable bids.

Mr. Smith, the Blue executive, also said the need to privatise BTC is even more urgent at this time.

"I think it's a necessity now based on the competitive forces that exist in the market place in The Bahamas", he said.  "It's evitable that the government has to get out of the telecom business in order for the company to be on good footing to compete against entities like SRG (System Resource Group) and Cable Bahamas."

SRG recently announced that it is starting its business and residential services and intends to compete head on with BTC.

SRG President Paul Hutton-Ashkenny said his company's entrance into the telecom industry is an indication that the government sees the liberalization of the telecommunications sector as a critical pre-condition for achieving economic development in the country.

Industry sources say that it is most urgent that the government recognize the extreme dilemma that the entire telecom industry and the financial and business community would suffer if the government does not move quickly to relinquish its control of BTC and put it into the hands of an entity that has the financial capabilities, management and technical know-how to allow the company to be able to compete in the local market against SRG, Cable Bahamas and other competitors that are soon to come.

They say that based on the contract proposal issued to The Bahamas Communications and Public Officers Union last week, it is clear that the board and executive management team of BTC recognize that the company has to be repositioned for competition.

The proposal calls for the benefits now enjoyed by BTC employees to be slashed up to 60 percent.

"We are sure that the shareholders of Cable Bahamas and SRG are laughing all the way to the bank because of the government's reluctance and procrastination in the privatisation process of BTC", said one industry insider.

Minister Smith, meanwhile, said the move toward privatisation is an ongoing exercise.

"It's just that it's not going to be done in the way it was done originally", he said.  "If a prospective buyer came along with the right attitude and the right price, I'm sure the government would be obliged to entertain the bid.  So the process may have come basically to a halt, but not the intent."

He said that BTC has to "continue to do things to develop and expand its managerial capabilities, develop its staff, while at the same time look for efficient ways of government having to divest its interests."

Mr. Smith (Blue President) believes that now is the time for the government to move ahead with the privatisation process.

"For the board and management of BTC to assume that they are in a position financially and futuristically to compete in a smaller entity like SRG or Cable Bahamas is very fool hardy", he said.

In his budget communication to parliament in May, Prime Minister Perry Christie made it clear that the recent termination of the privatisation process does not mean that the government has abandoned the privatisation of BTC.

"On the contrary, the privatisation of BTC remains an important item of my government's economic agenda", he said.  "Accordingly, the privatisation will be re-launched as soon as circumstances reasonably allow and on a basis, moreover, that will take adequate account of the lessons that were learned in the earlier process."

The Bahamas Telecommunications Company - BTC would be "eaten alive" if it is not privatised

Without Privatization, BTC Would Be "Eaten Alive", Minister Says

 

By Candia Dames

candiadames@hotmail.com

Nassau, Bahamas

May/24/04

 

 

 

The Bahamas Telecommunications Company would be "eaten alive" if it is not privatised, Minister of State for Finance James Smith said Sunday, while on the Love 97 Programme "Jones and Company."

 

"That's why the whole idea was to prepare it for privatisation", he said.

 

Minister Smith pointed out that the reason why BTC has continued to earn profits over the years is because it is a monopoly.

 

"They are fooling themselves if they think you could remove the monopoly and leave it open to competition", said the Minister, who was referring to critics who say BTC can become more efficient and survive without privatisation.

 

He added that BTC has the technical skills, "but they seem to lack the client concern that motivates big companies...these guys have been a monopoly for so long, they say 'You wait for me'."

 

Minister Smith reiterated that privatisation of BTC "is still on the table."

 

The original process that was started about five years ago has to be brought to a successful, legal ending, he noted.

 

"By that I mean we had put in place certain rules and regulations for privatisation and we went through with that and the very last thing now is to have a public announcement and to amend the public policy statement which we put in accordance with the Act", Minister Smith said.

 

He added, "This exercise has come to a close, but we will continue to talk to people until we can get what we want which would be a good price, a commitment to capital development, a commitment to training Bahamians and a commitment to upgrading the technology to first world standards."

 

While on the same programme several weeks ago, Lindbergh Smith, president of Blue Telecommunications, indicated that his company was willing to pay as much as $300 million for 49 percent of the shares in BTC.

 

Blue was the last bidder to be kicked out of the race to purchase minority ownership in the company late last year.

 

Asked if the government would be willing to accept that offer, Minister Smith said he didn't want to comment specifically on any one group.

 

"I don't want to comment on what I believe might be sort of confidential things, but there could be offers for BTC&", he said. "But you have to look very closely at how it is going to be funded. BTC is still a very well off corporation...you can probably buy BTC using its own resources."

 

Minister Smith added, "There have been some very creative financing things that were not quite [acceptable]."

New Offer For Bahamas Telecommunications Company - BTC

New Offer For BTC

Candia Dames

candiadames@hotmail.com

Nassau, Bahamas

06/02/2004

The final bidder pushed out of the race to purchase a minority ownership in the Bahamas Telecommunications Company is preparing a new offer to make to the government, the Journal has learnt.

 

But the Tenders Commission is not now open to any new proposals, as it has started another phase of privatisation, which would take on another form from the effort initiated more than five years ago.

 

Still, Blue Telecommunications plans to approach the government with a more fine-tuned and "more convincing" plan.

Company officials are hopeful that the government would at least be willing to entertain them.

  

The group's President Lindbergh Smith on Thursday was not prepared to speak to such reports.  But he did hint that his company is still interested in having a stake in BTC.  "The Minister of State for Finance alluded to the fact that BTC still has to be privatised," Mr. Smith told the Journal. "As a Bahamian, I am encouraged by the fact that the government is still committed to privatisation."

 

Financial Secretary Ruth Millar, who chairs the Tenders Commission, has told the Journal that the government has given the Commission a new mandate to review other options for privatisation of the telephone company.  But Mrs. Millar declined to say much else.

 

One source close to the Commission said Thursday that it is "utter nonsense" for Blue to still be working toward a plan for BTC.

 

"Their plan was rejected because it was not in the best interest of BTC or The Bahamas," he said.  "The Commission has been instructed to end that entire phase."

 

In rejecting Blue, the Commission revealed that there were serious concerns regarding the company's financial structure.

 

Blue reportedly planned to help pay for its stake in BTC by using the phone company's assets to borrow.

 

But a Blue official has since denied this saying that was, "totally untrue.  That was not so.  It was totally speculation that was pushed by some of the members of the Commission who do not favour privatising BTC."

 

According to the official, it was Blue's original plan to borrow on the assets of the company.

 

"The government was not comfortable with that and wanted a clearer transaction," he explained.

 

He said that in its revised plan, Blue was prepared to do an all-cash transaction.  While Blue is reportedly preparing its comeback, BahamaTel Consortium, which was headed by Tom Bain, has given up on BTC altogether.

 

Shortly after the government rejected the BahamaTel offer due to what Mrs. Millar called a deficient business plan, Mr. Bain told the Journal that his group had come to the end of the line.

 

State Minister for Finance James Smith has said that the government is "shifting gears" as it relates to the privatisation of BTC.

 

In the meantime, he said BTC has to "continue to do things to develop and expand its managerial capabilities, develop its staff, while at the same time look for efficient ways of government having to divest its interests."

 

The plan of the former government was to privatise the then Batelco and give it time to prepare for competition before opening the market.

 

But with that process failed, the new government is looking more toward liberalization of the telecommunications sector with its Telecommunications Sector Policy reportedly being revamped.

 

The idea now is reportedly to prepare BTC for the onslaught of competition that is surely to come in the near future.

 

Speaking at the Bahamas Business Outlook seminar on January 20, Minister Smith said the privatisation process "ought not to be abandoned since a privatised BTC would not only provide additional funds to government for debt reduction in 2004, but should also provide increased capacity for expanding technology including high speed data transmission capabilities which are essential to the e-commerce development effort."