It’s been five long years………… and we still seem no nearer to finding a strategic partner for the Bahamas Telecommunications Company (BTC). Indeed, some cynics would probably say Monday’s late announcement that the Tenders Commission would receive up to two extra months to decide upon a preferred bidder could not be bettered as an attempt to bring the privatisation process to a a screeching halt.
The decision to not make a decision had been predicted by many observers and, when this was duly confirmed, a level of despondency seemed to settle over those in the business and financial community spoken to by The Tribune yesterday – the prevailing mood being: “We could see this thing coming a mile off, but hoped it wouldn’t happen.”
Still, the one positive from the July 14 “non-decision” is that it may serve to concentrate minds around the Cabinet table. One interpretation of the announcement by the Ministry of Finance on the Tenders Commission’s behalf is that the latter is trying to send a message to the government: “We’ve done our bit; it’s now up to you to make the big decision on this process and who the strategic partner is going to be”, something that Ruth Millar, the financial secretary to the treasury, hinted at when she spoke to The Tribune on Monday. Afterall, the Tenders Commission is understood to have delivered its report and recommendations to Cabinet, so it is difficult to see why it needs two extra months.
And let’s be clear. The stakes for the Bahamas over BTC’s privatisation are high and go far beyond this nation’s borders. True, the corporation should not just be “given away” and The Tribune has its own reservations about the 49 per cent structure of the process, but there are other factors to take into account apart from price, namely the prospects for economic development, future privatisations and this nation’s standing in the international business community.
Certainly by deferring the announcement of the strategic partner, the Bahamas has sent out a message that is “bad for business”, as one observer told The Tribune., a message that is likely to have caused consternation on Wall Street and other financial and telecommunications circles who are involved in bids. One wonders what institutional investors and investment bankers are likely to make of the announcement, given that the International Monetary Fund (IMF) and Moody’s have all told the government that this privatisation needs to be completed and the size of the public sector shrunk. Certainly James Smith may face a difficult explanation job when he heads to New York to market the $200 million debt to issue.
Then there are the domestic impacts. Businesses, especially those in financial services industry and others that make a high volume of international calls, are unlikely to greet developments with much enthusiasm. Prolonging the process also prolongs the uncertainty for staff at BTC, hampering investment plans and technology upgrades, in addition to delaying the much needed tariff rebalancing moves.
And there is the competition element. Call-back services continue to ship away at BTC’s customer base, but that is far form being the primary concern. If the full two months to decide upon a strategic partner is taken, the BTC process is unlikely to be completed much before Christmas – if then – and the Systems Resource Group’s DigiTel subsidiary plans to begin competitor services on January 1, 2004, exposing the corporation to further problems chiefly an erosion of the value of its assets, meaning government is unlikely to achieve a better price than it has now.
Politicians like to retain as much control as they can, and to do so in this situation requires a rapid decision, as the current situation often sees bidders throw their arms up in desperation, say “What the Hell” and withdraw from the running. The process has gone too far now, and a failure to move forward on this privatisation will be a step towards economic stagnation.
Neil Hartnell, The Tribune
