The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Bahamas Telecommunications Company’s (BTC) TV launch plans were yesterday boosted by a $1.9 billion “game changer” that will likely increase its ability to compete head-on with Cable Bahamas for market dominance.

The acquisition of Columbus International by BTC’s controlling shareholder, Cable & Wireless Communications (CWC), also means that Cable Bahamas will now be competing against its own former controlling shareholder, and ex-chairman Brendan Paddick.

Mr Paddick yesterday made no secret of his desire to challenge the BISX-listed operator he once controlled, telling a conference with financial analysts how Columbus’s Internet Protocol (IP) TV “payload” could be deployed at a fraction of what it costs to build a traditional cable TV network.

Phil Bentley, CWC’s chief executive, revealed that the Bahamas was “the biggest opportunity we have” on IP TV, which the company is also aiming to also roll-out in six other Caribbean nations in the next 12-18 months.

And he disclosed that CWC’s $1.85 billion acquisition of Columbus’s entire share capital had “accelerated” the TV deployment plan, cutting three years off its projected roll-out schedule.

Describing the deal as providing “massive synergies” to the combined entity, which will have a $3.4 billion equity capital base, Mr Paddick said Columbus brought “pretty serious” cost savings to the table when it came to building a TV infrastructure.

While it would cost $5-$6 million to build a single cable head-end “done right”, Mr Paddick said Columbus’s IP TV “payload” could be “dropped on any node end” for a fraction of that sum - just $200,000-$300,000.

He said: “You can take our set top box home, take it to a home in the Bahamas, hook it into a cable modem, and get 350 channels, and 82 HD channels, riding over Cable Bahamas’ network.”

CWC’s acquisition of Columbus International, which owns fibre-optic communications infrastructure linking numerous countries in the Caribbean, Central and South America, thus significantly enhances its - and BTC’s - competitiveness in the TV sector in one swoop.

The deal will likely cut BTC’s ‘time to market’ with its IP TV product, set for launch in 2015, while also boosting its channel/content line-up and service quality.

That will be the immediate impact in the Bahamas from the tie-up between CWC and Columbus, which seems a ‘good fit’ at first sight. CWC has the cellular/mobile coverage and subscriber numbers in a space Columbus has no presence in, while the latter does likewise for its fledgling TV business.

The deal thus makes the combined entity a pan-regional ‘quad player’, and gives BTC tremendous Board and management experience on which to draw. The likely beneficiaries of all this? Bahamian consumers.

Apart from Mr Paddick, all Columbus’s major shareholders have cable TV backgrounds. They include John Risley, who was also involved with Columbus when it was the 30 per cent controlling shareholder in Cable Bahamas, and John Malone, a man regarded as one of the global cable TV industry’s pioneers.

All three men have elected to take a mixture of cash and shares in CWC as compensation for the sale, along with Board seats. Mr Malone, who owns a private island, and Mr Paddick with a property in Freeport, both own real estate in the Bahamas.

Mr Paddick and Columbus sold their 30 per cent equity interest in Cable Bahamas, making it a 100 per cent Bahamian-owned firm, several years ago.

The sale happened after their, and the company’s, Bahamian expansion ambitions were thwarted by successive governments using Columbus’s foreign ownership as a tool to block the Systems Resource Group (SRG) acquisition. This deal was consummated once Cable Bahamas was fully Bahamian owned, and did not need exchange control approval from the Cabinet and National Economic Council (NEC).

Now, following yesterday’s developments, it appears that Messrs Paddick and Risley will be returning to the Bahamas to compete against the company they once controlled.

Cable Bahamas executives did not respond yesterday to Tribune Business calls seeking comment on the implications of the CWC/Columbus deal for their business and the Bahamian communications market.

However, sources with contacts in the company’s management said they were not worried about the prospect of competing with CWC/Columbus, and were aware that the deal had been in the works for several months.

Barry Williams, Cable Bahamas’ senior vice-president, in an interview with Tribune Business a week ago, made it clear that the BISX-listed operator felt it had the network infrastructure, balance sheet and market position to fight off all-comers.

“We don’t take our competitors lightly, but we’re very optimistic about what we’re about and what we can do,” he told Tribune Business.

“Competition is not new to us. We’ve been in competition for most of our existence on broadband and the data centre side of things.

“We think we’ve got the tools to compete. We’re a strong company with a strong balance sheet, well funded and well capitalised. We’ve got the best network this side of the world, in North America and the Caribbean. Those are very essential tools that enable us to compete.”

Mr Paddick, meanwhile, yesterday recalled how BTC dropped a $450,000 a month contract with Columbus International to carry its communications traffic on its network.

“Ironically, our friends at BTC, woke up under new leadership and said: ‘Why are we paying Columbus $450,000 a month when we have our own [network],” Mr Paddick said, referring to the previous $5 million annual contract.

Mr Bentley, for his part, pulled no punches in terms of how he viewed the Columbus acquisition and its impact on CWC’s interests.

“This is probably the most important deal CWC has been involved in for many, many years,” he said. “It is simply a game changer. There’s nothing out there of this scale, with this technology, this system strategy and geography with such material synergies and potential for shareholder value creation.

“It’s a moment in time transaction. You could argue it’s a bit early in our journey to transform BTC, but this is the deal that delivers a winning brand.

“We’ve been tracking it for a while and it’s available and it’s now,” he added. “It’s the only deal that offers accelerated strategy, accelerated growth, technology modernisation and reduced operating risk in one go across the region.

“In an industry where size matters, it gives us scale in a number of territories, it gives us scope in product range, and it gives us speed to launch products in different markets.”