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URCA approves

Cable and Wireless Communications (CWC) is one step closer to purchasing a 51 percent stake in the Bahamas Telecommunications Company (BTC) after the Utilities Regulation and Competition Authority (URCA) yesterday announced the approval of the controversial sale.

URCA received the request for transfer of control on February 8, and had 30 days to make a determination on whether the transfer would give the new licensee (CWC BHL) an unfair market advantage.

CWC is a regional telecommunications provider registered in the United Kingdom.

URCA determined that BTC already controls 98 percent of the local fixed line market; 100 percent of the local mobile market; 30 percent of the local broadband (Internet) market; and between five percent and 25 percent of the market for international services provided in The Bahamas.

The transfer of license control, according to URCA’s 33-page adjudication, would not adversely affect competition in those markets.

“URCA has found there is no evidence to support a finding of substantial lessening of competition and therefore URCA has approved the change in control without any imposition of any conditions on the parties,”the regulator said in a press release yesterday.

The Communications Act states that”change in control” occurs when a person acquires control to ensure that strategic decisions of the licensee are conducted in accordance with the wishes of that person.

URCA was only legally required to determine the adverse effects on competition in areas outlined in section 72 of the Communications Act (2009).

However, URCA said it has noted the “significant public interest” in various aspects of the BTC transaction.

The opposition Progressive Liberal Party (PLP), Bahamas Communications and Pubic Managers Union (BCPMU), Bahamas Communications and Public Officers Union (BCPOU) and other groups have vehemently opposed the sale.

Many other trade unions have joined the voices of dissent, insisting that control of BTC should remain in Bahamian hands.

“In light of this interest (and) to ensure full transparency, URCA reviewed information regarding several issues which are not relevant to the matters which URCA is empowered by the Communications Act to consider in relation to its approval or rejection of the change in control,” said URCA.

Only four members of the public submitted comments to URCA by the February 24 submission deadline.

URCA said it also received a petition by the Committee to Save BTC for Bahamians.

One comment was received after the deadline and could not be considered, said URCA.

The regulator said all of the respondents were opposed to the transaction.

“Three of the respondents raised the issue that URCA’s CEO (Usman Saadat) and a human resource advisor (Marsha Lewis) are former Cable and Wireless executives and questioned URCA’s ability to adjudicate in this change in control, without a conflict of interest,” said the adjudication.

URCA responded that upon careful review of the facts, it had established that no actual or perceived conflicts arise in respect of any person who has been”in any way involved in URCA’s consideration of the parties’request for approval.”

Two respondents expressed concern that the$210 million in addition to stamp tax being offered for the majority stake in BTC was below market value.

“URCA notes that the commercial terms (of the sale) are a fiscal and policy matter and therefore, are entirely outside of URCA’s jurisdiction,” it said.

One respondent (Fox Hill MP Fred Mitchell) asserted that the proposed exclusivity of the licensee (three years) would violate the Constitution of The Bahamas.

URCA cited a case in which similar issues were asserted-Cable and Wireless (Dominica) Limited v. Marpin Telecoms and Broadcasting Company Limited that made it all the way to the Privy Council.

In that case, the Privy Council never made any determination, but referred the issue back to the Dominican courts.

“URCA is not the appropriate forum to consider matters of constitutionality of legislation in The Bahamas, and is therefore not competent to determine this point,” said the adjudication.

Another issue raised was the fact that an appeal against a Supreme Court ruling that shot down a motion to stop the sale is pending.

URCA reiterated that it only has the regulatory power to determine the impact of the transaction on market competition.

URCA further addressed respondents by stating that since Cable and Wireless has not tried to establish a foothold in The Bahamas telecommunications sector prior to its dealings with BTC, then it could not be viewed as a company that has sought to previously establish itself in the market.

The adjudication also addressed one respondent who claimed the new licensee could undercut competition by lowering rates to other Caribbean countries through its connections to its other Caribbean operations.

URCA said there is already legislation in place to deal with such a scenario.

Even with URCA’s approval the deal is not yet done.

The House of Assembly, and the Central Bank of The Bahamas must also approve it.

In addition, the Bahamas Investment Authority must issue the new licensee a permit and the Communications Act must be amended to redefine licensing terms to make the proposed exclusivity period legally binding.

Mitchell has also threatened to request a judicial review of the sale.

MPs are scheduled to debate the matter starting March 21.

Timothy Ingraham sti
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