International analysts are saying it is “illogical” for the PLP government to attempt to re-claim majority control of the Bahamas Telecommunications Company (BTC).
London-based analyst Nick Brown told a local newspaper that Cable & Wireless Communications (CWC) had anticipated an incoming Progressive Liberal Party (PLP) government might attempt to re-write its privatisation deal, so the agreement was designed to prevent that possibility.
Brown, an analyst with Espirito Santo, said the international telecommunications operator believes they have sufficient “legal protection” to guard against the Government’s attempts to claim a 51 per cent stake.
Speaking on the BTC situation in a note to investors, Mr Brown did not have much faith in the Government’s ability to wrest back 51 per cent majority ownership from CWC.
“In our view the most likely outcome is just an IPO and some other minor community support programmes, something the previous government was also considering, similar to the recent solution in the Maldives,” Mr Brown wrote.
The Bahamas Telecommunications Company (BTC) is forecast to generate $100 million in operating income this current financial year, a 9.9 per cent increase over last year.
An article by Neil Hartnell in The Tribune newspaper reported that Robert Grindle, a CWC analyst with Deutsche Bank, said the Christie administration’s moves did not “sound terribly helpful to the company’s efforts to transform the Bahamas into a “regional powerhouse via improved communications services.
And he joined a chorus of international business analysts who have stated that the Government’s attempt to renegotiate the privatisation deal would cause international investors to further question whether the Bahamas was a safe place to invest one’s money.
With the government’s projected $550 million fiscal deficit and national debt pushing towards $5 billion Mr Brown, the analyst with Espirito Santo, likened the possible outcome to a similar renationalisation exercise in Belize.
“There is precedence in the region in Belize, where the telecoms operator was re-nationalised but the deal ended up in litigation over the proposed compensation, and the resulting debt burden was a contributing factor to the country’s recent default,” Mr Brown wrote in his note to investors.
He added that press coverage of the situation in the Bahamas had also highlighted the impracticalities of pursuing a re-nationalisation.
Brown also told the Tribune’s Hartnell that CWC was not yet convinced of the Government’s total committment to go through with the acquisition of the majority equity ownership.
In other words, it may be more of a political stunt to appease supporters than an actual business strategy.
The majority of Bahamians hope that’s the case.
