The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A leading contender for the Bahamas’ second cellular licence has described the bidding process as “world class”, and among the best of 50 such exercises he has been involved in.

Frank O’Carroll, Digicel’s head of business development, praised the Request for Proposal (RFP) bid document as “very, very transparent”, and for letting all contenders know the rules from the start.

“I’ve personally been involved in at least 50 applications that Digicel has made around the world. This process is one of the most advanced and world class processes, no question about that,” Mr O’Carroll told Tribune Business.

“It’s been very well thought out, and you have to applaud the Government for taking this decision to liberalise the market.

“They’ve been really thorough in terms of the Request for Proposal. There are legally binding commitments for everything right across the board - the human resources, technical and financial point of view.

“As it moves forward, it’s very, very transparent. Everyone knows the stages left.”

Mr O’Carroll said members of the Cellular Liberalisation Task Force, headed by former financial secretary, Ruth Miller, brought “huge integrity” to the tender that should ultimately result in a second cellular licence being awarded. The Task Force is being assisted by the PricewaterhouseCoopers (PwC) accounting firm, and the Hogan Lovells and Charles Russell law firms from the US and UK, respectively.

“As a foreign investor, we have no doubt that the process is being managed very, very well,” he added.

Mr O’Carroll, meanwhile, said Digicel was not worried that the first round criteria seemingly favoured Bahamian-owned companies in areas such as the ‘51 per cent majority local ownership’ and network build-out pace.

Cable Bahamas, as a 100 per cent Bahamian-owned, publicly traded company, will likely score extra points for exceeding the 51 per cent ‘Bahamian ownership threshold’. And its existing fibre optic infrastructure leaves it well-placed to exceed the network build-out targets set in the RFP.

Pointing out that bidders would be assessed on their combined round one and two scores, the latter involving the spectrum auction, Mr O’Carroll said of bids with a strong Bahamian component: “We wouldn’t be concerned that they’d be looked at more favourably.”

He reiterated that the RFP document made clear to all bidder how the score would be weighted, including on bidder commitments to ‘Bahamianise’ the second operator’s management within five years or faster.

“The criteria is weighted not to favour a local company, but certainly local companies will score highly on that part of the process,” Mr O’Carroll explained.

He conceded that while the requirement for the second mobile operator to provide nationwide coverage was “hugely onerous for everybody”, this had again been disclosed from the beginning.

Mr O’Carroll added that Digicel was designing its network “to ensure it will be able to provide that level of coverage”.

Besides delivering a higher service quality than the Bahamas Telecommunications Company (BTC) from the get-go, the winning bidder must provide 75 per cent mobile services to New Providence/Paradise Island; Grand Bahama; Abaco and all its cays; Eleuthera, including the likes of Harbour Island and Spanish Wells; Andros; Bimini (including Cat Cay and Ocean Cay); and Exuma and its main cays within six months of being awarded the licence. This coverage must increase to 99 per cent of these islands after 12 months, and 85 per cent on Andros.

The successful bidder must also provide 75 per cent coverage to Cat Island; Long Island; San Salvador; the Berry Islands and its cays; Inagua and Ragged Island within 12 months, with this rising to 90 per cent after 18 months and 99 per cent after two years.

Acklins, Crooked Island, Long Cay, Rum Cay and Mayaguana are to have 75 per cent coverage within 18 months of the licence award, rising to 99 per cent in three years. And the minor Exuma cays will have 80 per cent mobile coverage from the new operator within 36 months.

The goal is clearly for the winning bidder to provide nationwide cellular coverage within 36 months, and not just ‘cherry pick’ the main markets, as BTC and Cable & Wireless Communications (CWC) had feared. Bidders can also commit to a faster roll-out.

Several observers, though, have suggested to Tribune Business that by requiring the second mobile operator to effectively provide universal servive coverage, the Government may have undermined the licence’s value.

This is because the winning bidder will be forced to serve the same unprofitable Family Island markets as BTC, thus forcing it to subsidise these areas via Nassau and other major population centres.