The tenders commission has rejected the preliminary bid by Cable & Wireless (West Indies) for the 49 per cent of Bahamas Telecommunications Co., the Ministry of Finance announced on the government’s website.
Legal adviser to the ministry, Rowena Bethel, confirmed Monday that Cable & Wireless did submit a bid, but the 13-member tenders commission did not take it to the next level.
As a member of the commission, Ms Bethel said she is not at liberty to reveal why Cable & Wireless’ bid was not accepted.
Lisa Agard, executive vice-president at Cable & Wireless, was said to be in a meeting when called at her office in Grand Cayman.
The public notice posted Friday on the government’s website revealed the short-listed bidders in relation to the transfer of shares representing 49 per cent of the share capital of the Bahamas Telecommunications Co. Ltd., successor to Bahamas Telecommunications Corp.
The Ministry of Finance announces that in accordance with sales process rules, the following bidders have successfully completed the preliminary bid phase and have been short-listed to undertake further due diligence and submit a final bid: Bahamatel Consortium (J.P. Morgan Partners, Citigroup Venture Capital, BahamaTel Private Equity Fund, Ltd. Mariner Telecom); Blue Telecommunications (Bahamas) Ltd.; and Detecon International GMBH TransWorld Telecom Bahamas, Ltd.
The Government is seeking a strategic partner for BTC; the partner is expected to provide the technical and financial resources and management capabilities to enable BTC to attain the highest levels of international and national competitiveness and performance in the telecommunications sector.
The Government currently owns 100 per cent of BTC, and intends to sell the 49-per-cent stake and transfer management control to the strategic partner. The transfer will take place by way of a public tender. The Minister of Finance, on behalf of the Government, invites parties who wish to participate in the tender, to register their interest.
The assets and liabilities of BaTelCo were vested in BTC on Sept. 4. As at June 30, 2002, BaTelCo had 125,400 fixed-line subscribers, representing a fixed-line penetration rate of 41 per cent.
BTC will continue to be the exclusive provider of international, inter-island and local public-voice services over fixed networks, and leased circuits for voice services in The Bahamas for a period of 24 months after the sale (subject to the award of one fixed-wireless licence to a third party, which will allow the carriage of voice from Jan. 1).
As at June 30, 2002, BaTelCo had some 95,800 pre-paid and post-paid cellular subscribers, representing a cellular penetration rate of 31 per cent.
BTC will also continue to be the exclusive provider of cellular services in The Bahamas for a period of 12 months after the sale.
For the financial year ended Dec. 31, BaTelCo’s revenues were $226 million and its earnings before interest, depreciation and amortisation were $100 million. BaTelCo’s net assets as at Dec. 31, 2001 were $287 million.
In order to receive information on BTC and the privatisation opportunity, the Government required that companies demonstrate that they meet the criteria and sign a confidentiality agreement, and pay a non-refundable registration fee of $10,000.
Companies that compete or propose to compete with BTC directly or indirectly, whether through a parent or subsidiary or through an associated company, in providing voice services and/or infrastructure in The Bahamas, or whose participation would according to the Government not enhance the competitive position of BTC and the telecommunications sector in The Bahamas or who otherwise will not fulfill the liberalisation objectives of the Government, were not permitted to participate. In addition, companies whose principal business is the manufacture of telecommunications equipment were not eligible to participate.
The sale was conducted via a two-phase process with the first phase culminating with the submission of non-binding preliminary bids. Short-listed parties were invited to participate in the second phase, which will lead to the submission of final bids.
Financial analysts say the bids ranged from $100 to over $240 million, and that anything over $250 million with other commitments to continue to service the Family Island is not a bad deal in this economic environment.
Analysts also believe that had Government moved swiftly to privatise BaTelCo several years ago, it might have raised as much as over $500 million.
The Government hired Deutsche Morgan Grenfell (DMG) several years ago to provide advice with respect to the sale of the 49-per-cent interest.
The questions remains whether DMG ever completed an independent valuation of BTC as a benchmark for evaluating bids and whether or not they advised Government of a minimum reserve price. It is understood that DMG was paid $100,000 per month, and that DMG total compensation package includes a performance bonus.
By Lindsay Thompson, The Nassau Guardian
