{"id":4466,"date":"2012-08-08T06:34:47","date_gmt":"2012-08-08T11:34:47","guid":{"rendered":"http:\/\/www.ict-pulse.com\/?p=4466"},"modified":"2012-08-08T06:56:16","modified_gmt":"2012-08-08T11:56:16","slug":"politics-way-5-takeaways-government-bahamas-plan-regain-majority-share-btc","status":"publish","type":"post","link":"https:\/\/ict-pulse.com\/2012\/08\/politics-way-5-takeaways-government-bahamas-plan-regain-majority-share-btc\/","title":{"rendered":"When politics gets in the way: 5 takeaways from the Government of the Bahamas\u2019 plan to regain majority share of the BTC"},"content":{"rendered":"

The Government of Bahamas\u2019 intention to regain controlling interest in the Bahamas Telecommunications Company is a highly polarising initiative, which many consider foolhardy and ill advised. \u00a0Below are five takeaways from this proposed plan.<\/em><\/p>\n

\"http:\/\/www.eleutheranews.com\/\"<\/a>Although most of us in the Caribbean might not be paying attention, a few weeks ago, the Government of the Bahamas (GoB) officially announced its intention to recover controlling interest in the Bahamas Telecommunications Company (BTC) from majority shareholder, Cable Wireless Communications (CWC). The Government has been positioning itself to engage CWC in talks by recently appointed a negotiating team. It has also cancelled a public share offering, in which the Government had planned to put 9% of BTC\u2019s shares up for public purchase.<\/p>\n

International ratings agencies and analysts, such as Moody\u2019s and Standard & Poor, have been watching the unfolding situation closely. Early views, many of which were captured in this week\u2019s new roundup<\/em><\/strong><\/a>, suggest that the Government\u2019s change of heart does not augur well for investor confidence. Nevertheless, the Bahamas situation provides a number of insights, which are not only applicable to countries, but can also guide professional\/business and personal endeavours.<\/p>\n

1.\u00a0 Remember the context within which earlier decisions were made<\/h3>\n

On 27 April 2011, the purchase of 51% stake in BTC by CWC was finalised, with the GoB retaining a 49% market share. However, efforts to privatise the BTC had been a long journey, spanning well over 12 years, and had been supported by the main political parties when they were in power:<\/p>\n

The chief motivation for the sell-off of BTC was the rapidly advancing technology of the telecoms business, which threatened to devalue the state monopoly and make its operations obsolete. A modern telecoms sector is seen as vital to the country’s economic interests, and a major strategic partner would enable BTC to compete and move forward in a transformed market\u2026<\/em> (Source: The\u00a0Tribune<\/a>)<\/p><\/blockquote>\n

However, although the Government had initially planned to sell 49% of BTC\u2019s shares, very few companies jumped at the opportunity \u2013 they expected controlling interest and consequently, management control over the business. Additionally, when there were some offers, companies backed out, or were not sufficiently transparent regarding their intentions. Ultimately, it appears that certain concessions were made by the GoB, regarding sale price to CWC, for such a slim majority control, and to secure the resources and expertise that such an international company could offer.<\/p>\n

2.\u00a0 Keep ego in check<\/h3>\n

\"http:\/\/www.freedigitalphotos.net\/images\/Other_Metaphors_and__g307-My_Way_Or_Your_Way_Signpost_p88140.html\"<\/a>The BTC was a profitable company for the GoB, where the dividends paid could be (and had been) used to bolster the budget or more generally, the country\u2019s fiscal position. Furthermore, there was considerable pride in the fact that BTC was a 100%-owned Bahamian company, and much of sentiments that are being expressed regarding the recovery of controlling interest, are along the lines of re-attaining control of this \u201cnational resource\u201d and cash cow.<\/p>\n

However, the cost to the Bahamas to buy back 2% of BTC\u2019s shares from C&W might be truly prohibitive, in light of its reported USD\u00a0550\u00a0million fiscal deficit, and on balance, might not be worth it. Moreover, in light of plans associated with the privatisation process to fully liberalise the telecoms sector by 2014, re-nationalising the BTC could be a step backwards. International best practice has indicated that competitive markets are best fostered when the government is not a player in the market, the policy maker, AND the regulator.<\/p>\n

3.\u00a0 New blood is often needed to improve the status quo<\/h3>\n

As indicated in the quote above, a real concern had been identified and remained an important impetus for the sale. With the sale to CWC, a number of changes\/improvements have occurred, many of which are geared towards re-positioning the BTC for imminent competition:<\/p>\n