The Tribune

EDITOR, The Tribune

PARLIAMENT has been dissolved, the parliamentary committee established to investigate the sale of BTC (an issue deemed by some to be of national importance) never reported.

I’m not sure they ever met. I had hoped they would. I had hoped that other BTC sale, the one that came ever so close to being consummated in early May, 2007, would have been part and parcel of the discourse.

Much negative, sometimes insidious commentary has been spoken and written about the sale by the government of The Bahamas) of 51 per cent of BTC shares to Cable and Wireless. The possibility of a degree of improbity has been suggested.

A myriad explanations, mostly insular, myopic, narrow-minded and nonsensical have been presented as to why the sale was less than desirable. While I accept the less than acceptable explanations coming from those who know no better (those not intimately familiar with the considerations leading up to the sale) I unapologetically harbour an almost putrid repugnance for those knowledgeable about the pre-sale considerations, especially those closely aligned with the almost consummated sale to Bluewater, who nevertheless malign and excoriate others with mendacious, ungenerous commentary.

A little history might serve to begin to put the issue in perspective. An initial attempt to sell a 49 per cent stake in BTC was launched in late 2002. Bids were received and evaluated but deemed to be unworthy. The attempted sale was aborted in late 2003. Bahama Tel and Blue Tel come to mind as two of the firms with whom earnest but unsuccessful negotiations initially took place.

A further attempt by the government to sell a stake in BTC was launched in 2005, following presentation of a presumably unsolicited proposal from Bluewater, an entity that seemingly came into existence not long before submitting the proposal and seemingly disappeared from existence not long after circumstances thwarted their purchase bid.

Sometime during the foregoing timeframe, the entire BTC enterprise was independently, professionally valued at approximately $500m. Sale of about 50 per cent of the enterprise could therefore reasonably be expected to fetch about $250m, the sale price potentially being significantly affected by how long a period BTC would be allowed to continue enjoying its cellular monopoly (each additional year of monopoly cellular service potentially sweetening the sale price by about $35m).

The government seemingly commenced earnest discussions to sell a 49 per cent BTC interest and cede management and board control to Bluewater following receipt of an indicative offer, said to be between $200m and $225m. Further, the indicative offer is said to have embodied an option for Bluewater to acquire an additional two per cent of BTC within a year following the initial purchase of the 49 per cent interest, thereby increasing its shareholding to a majority position of 51 per cent. Perhaps the foregoing is where the notion that 49 per cent equals 51 per cent might have initially arisen.

Moreover, the Bluewater offer was seemingly structured based on a payment plan, a portion of the payment not becoming due until some years after the sale would have been consummated and Bluewater given board and management control of BTC.

Presumably the May 2, 2007, happenings scuttled the anticipated arrangement. It is said some white men were camped out on the steps of the Cabinet building for an extended period on that date desperately trying to have a signature penned to the BTC sale agreement by the government. Euphoric anticipation seemingly quickly morphed to a labile dysphoria.

It may well be argued that BTC was sold for about $70m less than it might have been. The reason for the Treasury potentially being denied the incremental sum will shortly become evident. I noted earlier that liberalisation of the cellular market was a most important consideration affecting sale price, each incremental year of cellular monopoly potentially adding $35m to the sale price the government might receive for BTC.

For reasons not made clear, introduction of cellular competition proceeded at a quite torpid pace. BTC therefore enjoyed a competition-free cellular environment for about two years longer than contemplated at the time of the sale. Had the incremental two years of cellular exclusivity been part and parcel of the sales agreement, the government would have received about $70m more from the sale.

Notwithstanding the foregoing, the value of BTC has increased tremendously in the seven years since the sale to Cable & Wireless. Upon a cursory analysis, government’s 49 per cent (or is it 51 per cent?) stake in BTC is now worth more than the 100 per cent interest held prior to the sale. I also understand government has received more dividend distributions from its 49 per cent (or 51 per cent) stake than it had historically received from its 100 per cent stake. Cable and Wireless has also sold its interest at a premium. This leads to a reasoned conclusion that the sale has been decidedly to the benefit of both vendor and purchaser.

Another issue regarding liberalisation of cellular service is worthy of mention and possibly deserving of fulsome, critical enquiry. Why is it the government, on one hand, finds it desirable to with much alacrity but privily (some might say in the shadows) make shares in the newly-minted cellular company available to a handful of chosen individuals, while ordinary Bahamians continue to be denied access to the nine per cent of BTC shares that were to be made available to them via an (in the sunshine) Initial Public Offering?

MICHAEL R MOSS

MAY 5 2017