Govt defends its BTC deal
The government has released a lengthy statement arguing that its deal to sell 51 percent of the Bahamas Telecommunications Company(BTC)to Cable and Wireless Communications(CWC)is better for the country than the deal proposed by the Progressive Liberal Party(PLP)administration in 2007 for the sale of 49 percent of BTC to Bluewater Ventures Limited.
“CWC has the economies of scale and the purchasing power to give strong support to BTC in an aggressive competitive environment,”said the Cabinet Office yesterday in a statement.
“There is no doubt that CWC is a market leader, and we are fully convinced, and have seen the evidence, of the enormous transformation that the company has undergone in our region in recent years due primarily to its own conviction that change was essential in the face of competition. On the other hand, Bluewater had no operations at all to our knowledge.”
The government released the statement yesterday afternoon after the Bahamas Communications and Public Officers and Managers Unions led a demonstration at Parliament along with the National Congress of Trade Unions of The Bahamas.
Before losing the government in May 2007, the PLP was close to selling 49percent of BTC to Bluewater for$260 million. The Free National Movement is preparing to sell the BTC majority stake for$210 million plus taxes. The FNM did not conclude the deal with Bluewater after it won the 2007 general election.
In the statement, the Cabinet Office argued that the PLP deal would only have netted$150 million at the time of closing. It said Bluewater would have taken$70 million BTC had in the bank and another$40 million would have been paid over time.
“The sale price of$260 million was nothing more than a gimmick designed to deceive and mislead,”said the Cabinet Office.
Defending the FNM deal, the Cabinet Office said CWC will pay$210 million plus$7 million in stamp tax at closing.
“And, the government at closing will receive any net cash in excess of$15 million. Therefore, the net cash benefit to the government of the CWC transaction will be at least$202 million,”said the Cabinet Office.
The PLP has described the FNM’s BTC deal as bad for the country. The opposition has argued that the FNM is selling BTC for too little.
In a statement released on Wednesday, PLP chairman Bradley Roberts criticized the government for continuing with the sale to CWC”despite mounting national opposition by the people of The Bahamas.”
Since the late 1990s, successive governments have spent between$100 and$150 million attempting to privatize BTC. CWC is seeking to terminate 30 percent of BTC’s employees. It is unclear at this stage if the government or CWC will foot the bill for the separation packages for these workers.
If the cost of this separation process is assumed by the government, the overall cost of attempting to privatize BTC may assume most of the profits from the company’s sale.
As a sweetener to each of the potential buyers, both the PLP and FNM offered exclusivity periods for BTC’s cellular monopoly after the sale.
The Cabinet Office noted that its deal only extends the monopoly for three years while the PLP’s deal would have extended Bluewater’s cellular monopoly period for six years.
Competition in the cellular market would help drive down the high cell phone rates in The Bahamas.
“The offer from Bluewater is no way comparable to that from CWC. Such a comparison should get no traction from anyone who understands both offers,”said the Cabinet Office.
“Going forward the government will put more of the facts into the public arena. In any event, all facts and documentation will be released to the public two weeks prior to the House of Assembly being called upon to vote on the sale of BTC.”