The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Christie administration has “made it clear they respect” the agreement that privatised the Bahamas Telecommunications Company (BTC), its majority owner yesterday saying it would not allow the Government’s attempts to regain control to hurt its own shareholders.

Tony Rice, the London-based chief executive of Cable & Wireless Communications (CWC), said that while the Government had “indicated its preferences” to regain a majority stake in BTC, it had also acknowledged the validity of the April 2011 deal.

That agreement, reached with the former Ingraham administration, saw CWC acquire a majority 51 per cent stake for $206 million, and the company indirectly fired a ‘shot across the bows’ of the Christie administration as to what might happen if it succeeded in regaining government control.

Asked by London-based analysts what it planned to do regarding its minority 49 per cent stake in TSTT, Trinidad & Tobago’s national phone company, CWC said it either looked to gain control or, if that proved impossible, reduce its level of investment in the business.

Tim Pennington, CWC’s chief financial officer, said of ‘associate’ companies: “Where we don’t control them, either we want to get into a controlling position or redeploy capital tied up in those businesses, because there are other things we want to do with it.”

Translated, CWC hates having just a minority stake in the companies it invests in, which means it will likely do everything in its power to hold on to 51 per cent majority control at BTC.

That will complicate the task facing the Government’s negotiating team, which features businessman Franklyn Wilson; former attorney general Sean McWeeney; ex-Ministry of Finance legal adviser Rowena Bethel; and ex-BTC chief executive Leon Williams, as they seek to regain majority ownership on its behalf.

And, if the Government were to succeed, it would likely induce CWC to reduce its level of interest/investment in BTC, hurting the company and wider economy. Ultimately, it might prompt CWC to exit the business.

Speaking as CWC unveiled half-year results for its financial year ending April 30, 2013, Mr Rice diplomatically said he expected talks with the Bahamian government to move forward “in a fruitful way”.

He said: “On the Bahamas, we’re in regular dialogue with the Government of the Bahamas, who are our co-shareholders and partner. Indeed, as we’re in regular dialogue with all our partners.

“The new government has indicated their preferences with regard to BTC, but they’ve also made it clear they respect our agreement.”

Mr Rice did not elaborate further, and it is unclear whether he meant the Government respected the sanctity of the privatisation agreement as is, and would not seek to change it or regain majority control. That, though, seems unlikely, given that talks between the two parties are continuing.

The CWC chief executive added, though, that the company would look to strike a balance between working with the Government and protecting the interests of its shareholders when it came to retaining majority control at BTC.

“We’ve made some really good progress since acquiring the business,” Mr Rice said. “We’ve made a tremendous investment in moving from 2G to 4G, launching new mobile and fixed networks.

“We’ve upgraded the retail stores; we’ve probably got some of our best retail stores across the whole of CWC, and we’ve lowered the prices.

“We intend to keep investing. Our job is to work with them [the Christie administration] as a government partner, but also to ensure we do not do anything that disadvantages our shareholders.

“That dialogue.. it’s in its early stages. They’ve [the Government] only came in to office four-five months ago. It’s developing, and I’m sure it will progress in a fruitful way.”

Holding a 51 per cent majority stake in BTC means CWC can consolidate its financial results in its own balance sheet/financial statements. A minority stake, as desired by the Bahamian government, would not allow it to do this.

And with BTC continuing to be the main results driver for CWC’s Caribbean business, LIME, the importance of holding on to majority control in the Bahamas assumes even greater importance for the company - particularly where its financial results are concerned.