The Tribune

• Sell and leaseback deal for 345 sites to fund ‘better customer service’

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Government wants “part of the proceeds” from the sale and leaseback of all the Bahamas Telecommunications Company’s (BTC) 345 cell tower sites to be reinvested in improving services and 5G technology.

Valentine Grimes, BTC’s vice-chairman, told Tribune Business last night this was “the intent” of the Davis administration after BTC’s ultimate parent on Friday unveiled a $355m deal to sell, then rent back, some 1,300 cell tower sites spread across six jurisdictions including The Bahamas.

The deal, which will see Florida-based Phoenix Tower International take over the towers’ ownership while assuming responsibility for their upkeep and maintenance, blindsided BTC’s management and line staff unions who described the arrangement with Liberty Latin America, their carrier’s parent, as “very troubling”.

However, Mr Grimes told this newspaper there was nothing sinister about the deal, which he described as a growing trend in the international telecommunications industry. Besides monetising the value of key infrastructure assets, he added that it will also enable BTC and other Liberty Latin America affiliates to focus on improving the quality of mobile services they deliver to consumers.

Mr Grimes, who together with three other directors represents the Government’s 49 percent equity interest in BTC, confirmed that Board members have signalled “their approval” of the Phoenix sale and leaseback, and then final go-ahead is now in the process of being finalised.

He added that Liberty Latin America’s agreement with Phoenix remains “subject” to obtaining all the necessary regulatory approvals in The Bahamas, including those from the central government - National Economic Council, Investments Board and Central Bank (exchange control) - plus the Utilities Regulation and Competition Authority (URCA) and the Grand Bahama Port Authority (GBPA) for Freeport.

Should all these permissions be forthcoming, Mr Grimes said the Bahamian share of the $355m sales proceeds would be split between Cable and Wireless Communications (CWC), BTC’s immediate parent which is owned by Liberty Latin America, and the Bahamian carrier and the Government.

“It’s all in an effort to upgrade the facilities of BTC so that BTC could better service its customers, and part of the proceeds will be used from both sides, CWC and BTC and the Government of The Bahamas to invest in 5G (fifth generation) technology,” he told Tribune Business of the Phoenix deal. “That’s the intent.

“The Government has indicated part of the proceeds have to be set aside for upgrading BTC’s facilities, including 5G technology. That is part of the intent. There are approvals that have to come up, but that’s part of the intent of the Government of The Bahamas.”

Mr Grimes confirmed that all of BTC’s cell tower sites, both those owned and leased, are included in the Phoenix transaction. Asked if these total 345, spread across the length and breadth of The Bahamas, he replied: “That sounds like a good figure.”

As to the status of the necessary approvals, the BTC vice-chairman said: “The Board of BTC has indicated its approval of the transaction and, as is usual, the transaction is subject to the usual approvals from the NEC, Investments Board, Central Bank, the GBPA in the case of Freeport, and URCA. We are finalising the final Board approval.”

Mr Grimes confirmed that the sale to Phoenix includes “the towers themselves, and the land around the base of the towers.... It’s the land surrounding the footing of the towers”. BTC, and the other Liberty Latin America affiliates, will then lease back the towers via 15-20 rental agreements, enabling them to continue using the sites to deliver mobile and other services to consumers.

“This is a trend in the industry,” Mr Grimes added, explaining that it will allow BTC to focus on the quality and consistency of the communications services it provides to Bahamian businesses and households inclusive of 5G implementation.

“I think we’re moving in the right direction, and I think over the next two to three years we should see significant improvement in the service provided by BTC,” he said. “We are providing new technology to better assist us in providing service to Family Island consumers and will introduce that before the end of the year going into next.”

Liberty Latin America, in announcing the Phoenix deal on Friday, said it was part of a bid “to monetise approximately 1,300 mobile tower sites across” Panama, Jamaica, Puerto Rico, Barbados and the British Virgin Islands (BVI) as we as The Bahamas.

Given its archipelagic nature, The Bahamas’ 345 sites account for 26.5 percent - more than one-quarter, or one out of every four sites - included in the deal. “The transaction also provides advantageous arrangements to extend coverage with a further 500 sites being built by Liberty Latin America and PTI (Phoenix) over the next five years,” the former said.

“Inclusive of these commitments the total proceeds increase to $407m. Net proceeds are expected to be used to reduce debt and further invest in the company’s businesses.” It is unclear how many of the extra 500 mobile tower sites will be built in The Bahamas.

The deal is also likely to reduce the impact of depreciation on BTC’s annual results, given that the cell tower sites will no longer be included on its balance sheets. It remains unclear, though, whether the Phoenix transaction will impact Aliv, which has facilities co-sharing agreements on multiple BTC towers. Franklyn Butler, president of Cable Bahamas, which has the controlling interest in Aliv, could not be reached for comment.

Liberty Latin America, in unveiling the Phoenix transaction to financial analysts alongside its 2023 third quarter results, confirmed its affiliates will lease the towers back via 15-20 year agreements. It added that the transaction will take between three to six months to close.

Balan Nair, Liberty Latin America’s president and chief executive, said the carrier is not seeking to “monetise any other infrastructure” beyond the cell towers at this point. “We know, of course, we will be very opportunistic but no, that’s not what we’re looking at,” he added, also disclosing that no other cell site towers will be included.

“We are very pleased to have announced an agreement with a high quality partner in Phoenix Towers that crystallises the value of approximately 1,300 of our mobile towers and infrastructure assets at a very attractive cash flow multiple,” Mr Nair continued.

“We will enter into a long-term lease agreement with Phoenix upon closing which will enable us to continue to deliver leading mobile services to our customers and our support network expansion, including further 5G deployment plans across the Caribbean and Latin America. We anticipate using the transaction proceeds to reduce third party debt and buy back shares.”

Dagan Kasavana, Phoenix Tower International’s (PTI) chief executive, said: “Phoenix is excited to partner with Liberty Latin America and expand its presence in the Caribbean and Panama. This transaction strengthens PTI’s presence in existing markets while representing new market expansion for PTI in the markets of The Bahamas, BVI and Barbados.

“As the largest independent owner of wireless towers in the Americas, we look forward to enhancing wireless access in these markets by serving all our wireless customers and the populations of the region with better connectivity and solutions to help our business partners achieve their goals. We appreciate greatly the hard work of both teams to consummate this fantastic transaction.”

Phoenix, a privately-owned company, was formed one decade ago in 2013 and is backed by investors which include The Blackstone Group. Its goal is to own and operate wireless (cellular) infrastructure around the world.