The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Mobile liberalisation’s final stages have been compared to “the life of a duck in the pond’, a key adviser explaining that much progress made to-date is not visible to the Bahamian public.

Gowon Bowe, the PricewaterhouseCoopers (PwC) Bahamas accountant and partner, told Tribune Business that efforts to structure and set-up this nation’s second mobile communications operator were still moving forwards.

The process has yet, though, to reach the stage where potential investors are committing funds into escrow for equity stakes in ‘HoldingCo’, the entity that will own a majority 51 per cent stake in the new mobile operator.

Mr Bowe conceded that while the pace of such negotiations was not always as fast as persons hoped, the Government and its Cellular Liberalisation Task Force were not going to hold themselves hostage to a completion deadline.

“That’s still progressing,” Mr Bowe, an adviser to the Task Force, said of the mobile liberalisation negotiations.

“The economics, in terms of getting physical cash or investor commitments to put funds into an escrow account, has not commenced, but we’re making positive progress and hope to see some resolution to that in the near future.”

Approvals from the Government and Utilities Regulation and Competition Authority (URCA), as sector regulator, are required before the second mobile competitor can launch operations this year.

“We’re going through a process that requires Government and regulatory approvals, and when it comes to getting regulatory approvals in an efficient and timely manner, they don’t always move as quickly as you hope,” Mr Bowe said.

He added that this applied throughout the world, not just in the Bahamas, and said: “We’re in the process of doing the legwork. The legs are churning.”

The PwC partner then compared the mobile liberalisation process to “the life of the duck in the pond”.

“You’re calm on the surface, but underneath the feet are churning,” Mr Bowe told Tribune Business. “I know everyone is working very hard.

“I know there’s an eagerness for it [mobile liberalisation], but it’s not one of setting a target that becomes an issue if it is not met.

“We know we’re fighting against the clock on our objectives. It’s keeping them in mind and completing them as expeditiously as we can.”

Mr Bowe added that the Task Force’s key objectives included the successful liberalisation of Bahamian mobile communications, the last - and potentially most lucrative - market segment that remains under a Bahamas Telecommunications Company (BTC) monopoly.

Cable Bahamas was last year selected as the preferred bidder for the second mobile licence, after it saw off competition from Virgin Mobile (Bahamas) to win the spectrum auction with a $62.5 million bid.

The BISX-listed communications provider will have management/operational control of the second operator, known currently as ‘NewCo’, and will be HoldingCo’s equity partner with a 49 per cent stake.

Its market launch, and service roll-out schedule, should mean Bahamian consumers and visitors alike enjoy the normal benefits competition brings, namely lower prices, better service quality and new and improved products.

HoldingCo, meanwhile, is designed to “open up entrepreneurial ownership and opportunities by allowing people to invest in the patrimonial assets” of the Bahamas.

Tribune Business previously reported that it is intended to be more than just a vehicle to hold a 51 per cent majority stake in a mobile operator.

The long-term plan is that HoldingCo will act as a vehicle through which Bahamian institutional, and potentially retail, investor capital can be pooled to invest in public-private partnerships (PPPs) and other key infrastructure projects and assets.

Much work is now being done to ensure mobile liberalisation, and Cable Bahamas’ securing of the second licence, becomes reality. All parties - PwC, Cable Bahamas and the Task Force - are effectively juggling a number of balls that need to be caught at the same time for everything to work smoothly.

For starters, the Government has to “guarantee” to Cable Bahamas that HoldingCo will have the funding in place to match its share of the network infrastructure build-out costs.

While Cable Bahamas and HoldingCo will be responsible for start-up and initial capital costs in proportion to their shareholdings, the two sides will have to agree “projected capital injections” for each roll-out phase prior to the licences being issued.

The two sides will then finance these in proportion to their shareholdings, but the Bahamian investors in HoldingCo will have to agree to finance this via debt.

TheTask Force and PwC both have to find the investors for - and formally structure and set up - HoldingCo.

Until that occurs, and the latter’s Board of Directors are appointed, it will be impossible for Cable Bahamas (and NewCo) to establish and formalise the Shareholders Agreement and other aspects of their relationship with HoldingCo.

The speed with which Cable Bahamas’ licence is affirmed, and awarded, not to mention how rapidly it launches services, thus depends to a great extent to how fast the Government and its Task Force move in the coming weeks and months.