The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Bahamas must “really be concerned” about the negative message it is sending to international investors over the Bahamas Telecommunications Company (BTC), a senior Chamber official yesterday saying developers “should never” have to factor political risk into their calculations.

Winston Rolle, the Bahamas Chamber of Commerce and Employers Confederation’s (BCCEC) chief executive, told Tribune Business that the Christie administration’s ambition to regain a 51 per cent majority shareholding in BTC was bucking international trends, where governments were getting out of business and utility ownership.

Emphasising that the Government’s talks with Cable & Wireless Communications (CWC) needed to conclude swiftly, whatever the outcome, Mr Rolle added that the decision to cancel the proposed $37 million initial public offering (IPO) of a 9 per cent BTC stake would also hurt Bahamian investors and the company.

“The concern would be what kind of message is being sent to investors in terms of their ability to come to an agreement and hold that agreement as per the terms and conditions achieved,” Mr Rolle said of the BTC situation’s wider ramifications for foreign direct investment (FDI) and the Bahamian economy.

“When we transition from one government to the next, there is still a contractual arrangement the Government and country has made.

“So, when we have a new administration coming in and have a contract in place, we have to really be concerned about the message we’re sending to international investors who are doing business, and may want to do business, in the country.”

Mr Rolle, and other observers, have consistently expressed fears that the Government’s desire to renegotiate the BTC privatisation’s terms with CWC will undermine the confidence of other investors that their own agreements with the Bahamas will be subject to change driven by political whim.

The BCCEC chief acknowledged yesterday that similar charges were laid against the former Ingraham administration, particularly the ‘Stop, Review and Cancel’ claims after it took office in 2007.

The end result, though, is the same - namely that investor confidence in contractual security may be fatally undermined, and at a time when the Bahamas needs all the FDI and job creation it can get.

Investors eyeing the Bahamas will now, having seen CWC’s experience, have to factor ‘political risk’, and the possibility their agreements may be subject to change with every general election, into their business models and projections.

Pointing out that this “should never have to happen”, Mr Rolle told Tribune Business: “At most of the international forums that speak about investing in the Bahamas, one of the things, in addition to looking at the literacy rate and business climate, they also look at is the stability of government.

“While that may mean moving from one administration to the next with no challenges, from a business perspective for the most part it means that the direction does not go from left to right with the change in government.

“If I enter into a contract with the current administration, and the administration changes, this contract should still be honoured.”

Suggesting that more harm would be done to the Bahamas’ investment reputation the longer the talks between CWC and the Government went on, Mr Rolle told Tribune Business: “I’m hoping it ends quickly.

“The longer it drags out, the more it draws negative connotations to the country that we don’t need.”

Pointing out that the Government was going in the opposite direction to most countries by attempting to effectively renationalise BTC, Mr Rolle said most nations had handed over their utilities to private companies.

These firms, he added, brought in “best world practices to the workplace, run it more efficiently and effectively, and are accountable for the delivery of services”.

The BCCEC chief executive added that the Government’s decision to cancel the IPO of BTC shares left on the table by the former Ingraham administration would also impact efforts to create a shareholder society, and deepen a savings and investments culture.

Tribune Business has noted that the BTC IPO cancellation also goes against the PLP’s own election manifesto to create such a ‘shareholder society’, and Mr Rolle said the move might also impact the company itself.

Pointing out that the oversubscribed $10 million Arawak Port Development Company (APD) offering had shown the demand for shares among Bahamian retail investors, Mr Rolle said ownership would have ensured they remained loyal customers for the carrier.

“When you talk about liberalising the telecommunications market two years from now, there will be a migration to the new company entering - that’s human nature,” Mr Rolle explained.

“If they had shares in the company, and through utilising BTC’ services they were enriching themselves, they will be less likely to migrate.”

And, as shareholders, Bahamians would also take a keener interest in BTC’s delivery of quality services, Mr Rolle.

“It’s important from a business perspective, a service perspective and a Bahamian national psyche perspective as well,” he added.