The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Liberty Global’s “future plans” for the Bahamas Telecommunications Company (BTC) will weigh heavily on the Government’s decision over whether to approve its arrival in this nation, a Cabinet Minister said yesterday.

Khaalis Rolle, minister of state for investments, confirmed that its net $5.3 billion acquisition of Cable & Wireless Communications (CWC), which includes the 49 per cent controlling equity interest in BTC, represented “a major change” for the latter’s ownership.

And the trade union representing BTC’s line staff yesterday confirmed it had “reached out” to Liberty Media’s worker representatives in its existing Latin American operations to discover how it was likely to treat Bahamian employees.

Bernard Evans, the Bahamas Communications and Public Officers Union’s (BCPOU) president, also admitted to Tribune Business that it was possible Liberty might seek to exit BTC, adding: “Anything’s possible.”

He and Mr Rolle were reacting after CWC’s Board of Directors yesterday confirmed it was recommending to shareholders that they accept Liberty Media’s gross $8.2 billion offer - a price equal to 86.82 UK pence per share, and a 13 per cent premium to the company’s share price on Friday.

As far as the Bahamas and BTC are concerned, Liberty Media will now ‘inherit’ CWC’s controlling equity interest in, and management control of, BTC - on the same terms and conditions that the latter enjoys.

It is uncertain whether the 2011 BTC privatisation, which saw the then-Ingraham administration sell a 51 per cent controlling interest for around $206 million, contained any provisions relating to a change of ownership or control at CWC.

However, Mr Rolle said Liberty Media - which is controlled by the so-called ‘king of cable’, John Malone, would be subject to the same due diligence and approval processes applied to all incoming investors.

“Like any investor, they are subject to the same processes and the same level of scrutiny,” he told Tribune Business of Liberty Media.

“The Government understands this is a major change in terms of the ownership structure of BTC, and so they’ll face the same rigours as all investors.”

The BTC ‘change of control’ will also have to be approved by the Utilities Regulation and Competition Authority (URCA), as the independent communications sector regulator, as well as the Investments Board and National Economic Council (the Christie Cabinet).

Suggesting that Liberty Media’s intentions for and toward BTC will be key, Mr Rolle said: “The key for us is to understand what their [Liberty’s] media will be, and what their plans are for the future of BTC. I suspect that’ll be part of the approval process for us.”

Mr Evans, meanwhile, said the BCPOU was already doing its own due diligence on Liberty Media and Mr Malone - in particular, trying to determine whether they are worker and union friendly.

Liberty Media already has operations in Puerto Rico and Chile, and Mr Evans said: “We are reaching out to them now, worker representatives in Puerto Rico and Chile, to get an idea of their style of operations, their relationship with employees and respect for employees.”

He suggested that with Mr Malone in control, Liberty Media would likely take on much more of his personality in terms of its management, operations and employee relations.

Reiterating that he was personally not surprised that CWC was looking to sell up, and become part of a bigger organisation via acquisition, Mr Evans said BTC’s current controlling shareholder was more than 140 years-old.

“We knew their existence had come to an end,” Mr Evans said, recalling his stance during the 2011 privatisation. “We felt all along they were only looking at three-four years out, and all they were doing was window dressing to try and find a buyer.

“We’re not surprised. We knew this company was building its portfolio to make itself more attractive.”

With Liberty Media’s CWC acquisition set to complete by the 2016 second quarter, the implication for BTC is that it will become part of a much larger, multi-billion communications empire.

As a result, its significance under Liberty Media will diminish when compared to the relatively important role it played for CWC - at least prior to the latter’s purchase of Columbus International.

And, with Cable Bahamas selected as the preferred bidder for the Bahamas’ second mobile licence, BTC’s value to Liberty Media will also be eroded.

This, and BTC’s small size, increase the likelihood that Liberty Media may ultimately decide to spin-off and sell the controlling 49 per cent interest in BTC.

And the resulting drop in the company’s value as a result of Cable Bahamas’ intrusion into a market, where BTC earns almost 75 per cent of its revenue, could depress any sales price to a level that puts it within range of Bahamian investor groups and institutional capital.

Acknowledging that Liberty Media might well choose to exit the Bahamas, Mr Evans told Tribune Business: “Anything is possible.

“BTC is not so much attractive in terms of serving a country with 350,000 people, and it will split the revenue with the new mobile operator. Investors may decide it’s not worth the bother, and sell to another investor.”

Mr Rolle, for his part, added: “You never know with these things. When they go through these acquisitions, part of the process is rationalising which businesses and units work out whatever mandate they have.”

Mr Malone already holds a 13 per cent equity stake in CWC after the latter last year acquired the Columbus International business in which he held stock.

That move now looks increasingly like a deal to get ‘the camel’s nose under the tent’, and several industry insiders speculated at the time whether the Columbus deal was merely a prelude to Mr Malone and Liberty making a play for CWC.

The billionaire investor already has strong Bahamas connections through Sampson Cay, his private island in the Exumas.

And, ironically, Liberty Media also controls Virgin Media, the parent of Virgin Mobile. An affiliate,or franchise of the latter, was the unsuccessful competitor to Cable Bahamas in the battle for the second mobile licence.