The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The FNM’s deputy leader yesterday expressed concern over whether the ‘best bidder’ would necessarily win the second mobile licence, given the Government’s “vested interest” in ensuring the Bahamas Telecommunications Company (BTC) survives.

K P Turnquest told Tribune Business that he was “a little concerned” with the mobile liberalisation process, given that the Government - who will ultimately have to approve the winning bidder - effectively has a major ‘conflict of interest’ through its 49 per cent direct equity stake in its BTC competitor.

“I’m a little concerned with the entire process,” Mr Turnquest said, “and whether we’re going to have a true evaluation of the next operator outside of political considerations, and whether we get the most technically and financially capable operator into the market.

“With the Government owning 49 per cent of BTC, they have a vested interest in seeing BTC survive and do better than the competition.

“I do hope the second provider gets a fair shot and is treated fairly to ensure, at the end of the day, the Bahamian people get the service they deserve.”

Tribune Business sources close to the liberalisation process have suggested BTC and its controlling shareholder, Cable & Wireless Communications (CWC), would prefer Virgin Mobile (Bahamas) to be selected as the winning bidder, and its new competitor.

While Virgin Mobile typically licences its brand name to franchisees/independent owners in the jurisdictions it operates in, sometimes taking equity stakes and providing management assistance, it has also historically employed a Mobile Virtual Network Operator (MVNO) model.

This sees it rent infrastructure/network space from existing carriers, such as BTC, rather than build-out its own network, making it effectively a ‘reseller’ of minutes to its customers.

The advantage of an MVNO model, in the context of the Bahamian process, is that with no network of its own to build, such an operator can hit the roll-out/launch targets that even Digicel has admitted are ambitious.

Mr Turnquest, meanwhile, expressed hope that the new operator would give BTC the “impetus” to improve its service quality, although he questioned whether competition’s arrival would impact BTC’s ability and willingness to undertake further capital investments.

He added, though, that it was an “inherent conflict” for the Government to even temporarily hold a majority 51 per cent stake in the second mobile operator, while it waits to transfer this to Bahamian institutional investors via a private placement.

If such a scenario transpired, it would leave the Government as a significant shareholder in two rival mobile operators.

While advisers to the cellular liberalisation process have described such an outcome as unlikely, given anticipated high investor demand for the 51 per cent to be held by ‘HoldingCo’, Mr Turnquest said that if it did play out it would be totally incompatible with the deregulation/privatisation objectives for the entire communications sector.

He added that it was “contrary to the whole idea” of getting the Government out of the conflicted position of being owner, operator and regulator in the communications sector.

And Mr Turnquest told Tribune Business that he “could never understand the rationale” for the Government holding on to its 49 per cent BTC equity stake, as opposed to selling it to the Bahamian people via a share offering.

“Competition is going to be significant, and the value of BTC is going to take a hit,” he added. “As the majority shareholder, the people of the Bahamas are going to stand to take a financial loss. Why the Government didn’t move to share that risk is beyond prudent financial management.”