The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Cable Bahamas yesterday received approval from the leading US communications regulator for its $24 million acquisition of US Metropolitan Telecom, one of its three Florida-based acquisitions.

Taking its cue from the US government’s national security agencies, which had given their backing for the BISX-listed communications provider’s purchase a day earlier, the Federal Communications Commission (FCC) said it had no objection to the deal given that it accounted for a less than 10 per cent market share.

The FCC said: “Grant of the application will serve the public interest, convenience, and necessity.

“Upon consummation of the transaction, the resulting entity would have a market share in the US interstate interexchange market of less than 10 per cent, and would provide competitive telephone exchange services or exchange access services (if at all) exclusively in geographic areas served by a dominant local exchange carrier that is not a party to the transaction.”

US Metropolitan Telecom is the provider of a fibre optic ring that connects northern and central Florida. It is both an attempt to give the BISX-listed communications provider instant critical mass, and build a business model similar to the one it has developed in the Bahamas.

While its earlier announced $65 million acquisitions of Marco Island Cable/NU Vu and Summit Broadband give Cable Bahamas providers of cable TV, broadband Internet and phone services, US Metropolitan Telecom will provide it with the necessary telecommunications infrastructure in Florida - the same role as its wholly-owned Caribbean Crossings subsidiary performs in the Bahamas.

US Metropolitan Telecom’s fibre optic ring runs from Miami all the way across to the Florida west coast, then tracks north to the Orlando area, and back down to Miami again.

Tribune Business understands that US Metropolitan Telecom already carries communications traffic for Marco Island Cable/NU Vu and Summit Broadband. It will perform the communications infrastructure role that Caribbean Crossings does in the Bahamas, with the other two entities acting as the cable TV, Internet and phone providers.

With the Summit Broadband deal also approved by the FCC, which has granted Cable Bahamas a ‘window’ until April 8, 2013, to close that purchase, the only hurdle to closing its $89 million worth of Florida acquisitions remains obtaining Bahamian government permission.

On the Bahamian side, the company needs exchange control approval from the Central Bank of the Bahamas to facilitate the foreign currency outflows necessary to consummate its purchases.

Ultimately, though, the decision rests with Perry Christie’s Cabinet and the Investments Board, the latter often functioning as a Cabinet committee or sub-committee.

Tribune Business understands that the delay in obtaining approvals on both sides of the Florida straits has forced Cable Bahamas to push back its planned $40 million preference share issue, which will part-finance the deals.

It is also understood to be costing the company money in keeping the deals alive, and has potentially exposed it to a “substantial break-up fee” - particularly in the Summit Broadband transaction.

The transactions have exposed the difficulties faced by Bahamian companies in obtaining timely approvals, especially in multi-jurisdictional deals.