Felix Stubbs, spokesman for TransWorld Telecom Bahamas Ltd., said the company was disappointed at not being chosen, but that the government reserved the right to choose the “best” bidder.
The IBM Bahamas executive said however, that the company would carry out an investigation into the selection process.
Lingberg Smith, president of Blue Telecommunications Corp. though disappointed, was pleased the government selected a strategic partner.
However, he was surprised that the government decided to choose a bank-based partner instead of Blue Tel, which comprises a number of former BTC workers, with vast telecommunications experience.
Blue Tel’s strategic partner is worldwide telecommunications giant Detecon Inc., the management arm of Deutsche Telekom. Detecon has participated in numerous privatisation processes including Tanzania, Uganda, Bolivia, Taiwan, Mozambique and South Africa.
Meanwhile, BahamaTel is happy that it was selected as the preferred bidder for BTC, formerly Bahamas Telecommunications Corporation (BaTelCo).
“I do feel very good, I am excited, it has been a long journey,” said Tom Bain, principal of the BahamaTel consortium and former managing director of JP Morgan Chase.
“This is the beginning of an evolution in the Bahamian economy as the government begins to privatise its corporations, thus, improve productivity in the country which would make the country more cost competitive with other tourist destinations,” said Mr. Bain told The Guardian on Tuesday during a telephone interview from London.
On Monday, the Ministry of Finance, which is overseeing the sale of BTC, officially announced that the 13-member Tenders Commission had evaluated bids submitted by the three short-listed bidders. And, that the preferred bidder is the BahamaTel Consortium.
The ministry stated however, that if at the end of the 30-day period final agreement satisfactory to the commission is not reached, the governing body may extend the period of exclusivity for negotiations with the preferred bidder; or the commission may commence negotiations with the bidder ranked next highest to the one initially as the preferred bidder.
“The Tenders Commission reserves the right to terminate the tender procedure at any time that it considers, in its discretion, that all of the bids submitted are unsatisfactory having regard to the objectives of the tender,” the ministry said.
It added that the tender and share sale might be cancelled at any time, but that it expects a significant negotiation.
Discussing the government’s right to cancel the process at any time, Mr. Bain said after a five-year process, that avenue did not seem financially prudent.
“It’s been a very long and detailed process and an enormous amount of work have been put into it by all bidders, especially BahamaTel,” he said. “We have responded to very detailed requests from the Tenders Commission, throughout the process. I don’t imagine that they would be likely to cancel immediately.”
Responding to arguments that it would not be in the government’s best interest to sell what is probably its most lucrative corporation, Mr. Bain pointed out that BTC was under very serious threat, financially.
“To sit back and assume that BaTelco would continue to be a very profitable entity under the current arrangement would be a mistake,” he said. “The company is in very serious need of professional assistance because it faces attacks from a number of directions.”
Mr. Bain noted that the company’s international revenue is being eroded by illegal callbacks; illegal voice over ID, and Cable Bahamas is dominating in the high speed Internet arena. This is coupled with SRG’s company, Digitel, about to launch its wireless product in January.
“Looking back at BaTelCo’s performance does not give much help when considering what it is going to face in the future,” Mr. Bain said.
He said he was convinced that the best thing the government can do is to bring along a partner, who can bring the professional skills that are necessary to sustain the value of the company.
“If the government is to cancel after such a long and exhausting process, the signal it would send to the international business world would be a dreadful one because it would indicate that the government had not been pursuing this seriously, or was not capable of completing this privatisation,” Mr. Bain said.
He added: “It is very important that we enter this negotiation phase quickly, but the difference is that now, both parties would be at the table and discussing what their needs are and hammering out mutually acceptable agreements.”
Up until now, it has been a one-way conversation, where the bidders have been responding constantly to detailed requests from the government, but receiving very little indication from the government as to what its expectations were.
Responding to a slew of recent BaTelCo advertisements for highly skilled personnel, Mr. Bain stated that the company must continue to go about its business while the privatisation is still in process.
But, he said the company was cautioned about entering into large financial obligations prior to the selection of a strategic partner.
He said though, that BahamaTel supported the upgrading of BaTelCo’s cellular service pegged at some $30 million.
“We recognize that the company has reached the point where it cannot offer new cell phones, or maintain its current traffic, and the company needed to make the investment.”
Commenting on the outcome of the bidding process, Mr. Bain said BahamaTel was always confident that it would win; presenting a combination of financial backing and technical expertise.
BahamaTel is part of a consortium – JP Morgan & Citigroup Venture Capital, which have teamed-up to bid for 49 per cent ownership of the Bahamas Telecommunications Company).
JP Morgan & Citigroup Venture Capital already has presence in The Bahamas and employs about 218 financial professionals in Nassau. The BahamaTel Consortium also includes the BahamaTel Private Equity Fund, a Bahamian mutual fund established to bring broad-based Bahamian participation to the bidding process.
The fund which contributes about $12.5 million to the group’s tender, has capital from six institutional investors, comprising pension funds, unions and insurance companies, and was aggregated using financial and legal advisement from KPMG Financial Services, SG Hambros Bank & Trust and the Lennox Paton law firm.
Approximately 30,000 Bahamians are reportedly involved in the transactions as a result of the mutual fund.
By Lindsay Thompson, The Nassau Guardian
