CABINET OFFICE
Statement on the Sale of 51%
Interest in BTC to CWC
It is time to bring an end to the deceit that is now becoming a national debate regarding the Government’s decision to sell 51% of the Bahamas Telecommunications Company (BTC) to Cable and Wireless Communications (CWC) and its comparison to an earlier decision to sell 49% of BTC to Bluewater Ventures.
Price Comparison.
The price agreed with Bluewater was $260 million for 49% of BTC. But there was a net balance of approximately $70 million of BTC’s cash in its bank account at the end of May 2007. There was no allowance in Bluewater’s offer for this cash to be removed from BTC.
Using the same maths we have heard with respect to the Cable & Wireless transaction, this constituted a net cash transaction of $190 million. Of this amount $25 million was deferred for five years and another $15 million deferred for six years.
The net cash therefore, that the country would have received from the Bluewater transaction at the time of closing is $150 million.
The deferred payment of $40 million, which was also interest-free, would have in fact been paid by BTC itself and because of time-value the money would have amounted to less in value than $40 million. The sale price of $260 million was nothing more than a gimmick designed to deceive and mislead.
The net cash to Government of the proposed Bluewater bid would therefore have been less than $190 million. It is deceitful not to openly acknowledge this fact.
In the case of the CWC transaction, the purchase price is $210 million which will be paid at closing plus $7 million in stamp taxes, that is $217 million. And, the Government at closing will receive any net cash in excess of $15 million. Therefore, the net cash benefit to the Government of the CWC transaction will be at least $202 million. No account is taken in this statement of the tens of millions of dollars received by the Government from BTC since the aborted sale to Bluewater as the Government did not intend to sell BTC’s cash.
Exclusivity Period
A comparison of the exclusivity period for the mobile service which has an annual cash value of a very significant amount shows Bluewater was granted an exclusivity period of six years while for CWC the exclusivity period for mobile service is three years.
Regarding the fixed line monopoly, Bluewater was granted an exclusivity period of six years. As for CWC, this issue does not arise since we already liberalized fixed line services and CWC will therefore be in a competitive environment from the beginning of its operation.
Minority vs. Majority Ownership
Much is being made of the issue of sale of 49% against 51% and the implications inherent in the difference.
The principal issue that arises in minority versus majority interest is the element of management and control of the company. In the case of Bluewater the fact is that the management and control was to be given to Bluewater without acquisition of the majority interest.
Bluewater was given control of the Board and of the Company by virtue of its greater number of directors and of the day-to-day management by virtue of its authority to select the Company’s Chief Executive Officer. The important distinction is that Bluewater secured effective majority control without having to pay for it.
Credible Partner
Perhaps the most compelling issue for the Bahamian people’s consideration is the issue of credibility of the selection for partnering with BTC in its quest for the transformation of telecommunications networks throughout The Bahamas and assurance of a telecommunications framework that facilitates and supports the economic prosperity of the country.
A comparison of Bluewater and Cable and Wireless is in order.
Firstly, it is not possible to know who Bluewater is because there is no history to refer to. Bluewater was a shell company registered offshore in Jersey in the Channel Islands, and was established in 2003, 140 years after Cable & Wireless commenced operations. It had no financial statements and no organizational support. It only had 2 issued shares of 1 UK pound each. It was previously called Bluewater Communications Ventures Ltd. It changed its name to Bluewater Ventures Ltd. removing the word “Communications”.
As far as we know, given the 2 shareholders are nominee companies, its principal is one individual foreigner who used to be in a communications business, NTL, which went into bankruptcy in 2002. We don’t know who the shareholders are, as this information was never provided to us. It is mind-boggling that a decision was once taken by a Government of The Bahamas to sell BTC to this entity. It is even more astonishing that there are those still bold enough to publicly tout this experience today.
On the other hand, the partner the present Government has selected, CWC, is a substantial telecommunications company with revenues of $2.5 billion, operating in 38 countries, 13 of which are in the Caribbean. It has 8.3 million mobile customers, 1.8 million fixed line customers and 600 thousand broadband customers.
CWC has the economies of scale and the purchasing power to give strong support to BTC in an aggressive competitive environment. There is no doubt that CWC is a market leader, and we are fully convinced, and have seen the evidence, of the enormous transformation that the company has undergone in our region in recent years due primarily to its own conviction that change was essential in the face of competition. On the other hand, Bluewater had no operations at all to our knowledge.
CWC itself will admit to a time in its past of which it is not proud. That it is a different company now is confirmed by the views of others in our region who were once amongst its greatest critics.
The offer from Bluewater is no way comparable to that from CWC. Such a comparison should get no traction from anyone who understands both offers. Going forward the Government will put more of the facts into the public arena. In any event, all facts and documentation will be released to the public two weeks prior to the House of Assembly being called upon to vote on the sale of BTC
I pray for the Bahamas and the Bahamians to not only hear, but to understand what they hear, to not only see, but to perceive with a perception of wisdom. this is not a letter forum, ie: such as a PLP or FNM issue. this is an issue for all people to become enlightened and encouraged as bahamians to take a higher stand and not be so mediocre and negative. we all need the C&W in order to have the first world status of communication and technology to go with the first world Hotels such as BAHAMAR and the other future projects which is to come. Jobs will be a none issue for the bahamas and all of those who are so negative right now, will be very ashamed of their actions, remember this is all going down in our media history. No one is coming in to take advantage of bahamians. the deal is a good one, so stop all the negative and mediocre tootings before no foreign company ever wants to invest here. We must learn to “Share” and to “love” our neighbor as ourselves. Who in the World will want to come here and take advantage?
Will the Prime Minister be writing another $1.9million cheque (on the Bahamian people’s account) to this “Un-known” company.
As they have violated the terms of their own “secret” arbitration agreement.
When will the Cabinet Statement be release to explain this?
No PLP to blame for this.
The issue about who has experience and the cost of services etc. is just a sham, these matters were not part of any discussion when the announcement to sell BTC was made. On the matter of “Experience”, our present Leader became PM without any experience but claim to be doing a good job. Then who among us get the opportunity to try walking before we walk, O by the way, most business don’t have the luxury to try it before your really start. This foolishness about not track record, is just absurd, what about those persons who over the years began cyber business in some basement and garages but now through trial and error is the largest business this side of the universe. Then lets talk about telephone cost, for a long time I could not understand why Government wanted to make $40m, $20m profit maintain the same prices and now talk about better rates, this is just a sham, This PM can cause a reduction in rates with just one call, here again this is nonsense, and don’t hold water against the reason to sell. This is just another example in Dictatorship under the disguise of Democraticy, what flimsy excuses
Guess what, to put everything to rest since the government wants to compare their deal to that of the PLP’s, which is the wrong way to go, but anyway at this point I don’t know who to believe, so the only solution is to make both MOU’s public and let me use the brain God gave me not to see which is the best deal but for me to see if any of them are any good. PLease stop treating me like I am five years old and interpreting everything to me. I am an educated individual, let me make up my own mind and stop trying to convince me without giving me the evidence I need.
I completely agree ‘Unfair Advantage’! Tell them govt ministers we been to ‘school/ University’ too! We can read and comprehend! Why didn’t the PM lay the ‘MOU’ on the floor of the House yesterday so ALL Bahamians could read this document themselves instead of using ZNS to make this long drawn out statement about what the Opposition was planning to do! You are the govt not the PLP! Who are they trying too fool!!
All I want is better service. I don’t want to wait months for a telephone! Competition will either break you or make you better. C&W was forced to do better because of Digicell. Who will force BTC to be better? I really wish us Bahamians will stop being so rowdy and emotional because things are not in their favour. I pray form the day when we can be more concern for Bahamians and not who got a better deal whilst in government.
I’m sure the PLP will answer to this and refute what’s here, but this is not important, FNM you are the Govt., so act like it and stop trying to deflect the main issue, I wish this band of Union workers to never ease up and to keep the pressure on the Govt., and stop them from selling this country and it’s people down the river, what about Grand Bahama, PAPA, believe me the truth will come to light in the long run and this is deeper than we think, one more question for the Govt., who is paying out the CLICO people, is this money coming from CLICO or from the Bahamian Treasury?, just asking.
you know the FNM is feeling the heat when their response is, “Look at what the PLP did.” LOl!
The issue is not PLP vs FNM or Bluewater vs Cable & Wireless. It is about Foreignization vs Bahamianization. Focus people, our best lands are gone, our economy is foreign owned and dominated and now our cashcow national entity is about to go. What will be left!!! Jobs is that the epitome of the Bahamian dream and aspiration or ownership??
It’s about what’s best in terms of the quality and cost of the service we will receive. Somehow this point is being overlooked by many persons who are concerned with the nationality of the owners. This also matters more than whether the BTC is sold to the highest bidder. The sale should generate the highest value to govt and the private sector (cheaper bills and business growth) combined!
The govt is right. On a present value basis the Blue Water deal is not necessarily comparable.
Whatever.. We are not dealing with the PLP, we are now concerned with BYC. We don’t want it sold to C&W. We don’t give a shit what the PLP purposed to do back then, we are dealing with the NOW sale of BTC. Stop blaming the PLP. We are dealing with the Government of the Bahamas, not a party….
Comments are closed.