PM explains BTC 51%decision
The government made the decision to sell the majority stake of the Bahamas Telecommunications Company(BTC)because no company would agree to buy the minority share for a reasonable price, according to Prime Minister Hubert Ingraham.
“The truth of the matter is we could not find any international telecoms company willing on to buy 49 percent,”Ingraham said to the crowd of people gathered at the Free National Movement’s mass rally on Clifford Park on Saturday night.”We would have liked to have sold 49 percent. We couldn’t. We had no one to buy it. If we could have, we would have. After all, that was our original intent.”
The government has met extreme criticism over the sale of the majority stake in the profitable company to Cable and Wireless Communications. Many observers believe that the government should have retained the majority ownership.
However, Ingraham said the government’s efforts to do just that did not go as planned.
“When the Free National Movement(FNM)first put this out, we said we would sell 49 percent. And The Bahamas went to bid twice. We couldn’t find an international company that was willing to buy at an acceptable price at 49 percent,”he said.
Ingraham added:”Since I couldn’t find any telecoms company to buy less than 51 percent, I accepted that reality and agreed that we would sell to Cable and Wireless.”
Ingraham explained that there are various reasons why large telecoms companies did not want to buy the lesser stake.
“A strategic partner today wants the certainty that he can control those business decisions that impact upon profitability, regard being had to the level of investments he makes. Purchasing 51 percent does this. Having a partner who owns 51 percent ensures that he is fully vested and will work to ensure that the company succeeds, because any losses will be 51 percent to his account. This is important when facing fierce competition.
“As we have experienced in earlier attempts to privatize BTC, large credible partners were not interested in minority ownership of BTC.”
Ingraham said even though the government will own the minority stake it will maintain veto power in a number of matters to protect the interests of the Bahamian people.
Debate on the issue is expected to begin in the House of Assembly today, as the sale requires parliamentary approval, among other things.
At the conclusion of the sale, the government would get$210 million plus an additional$7 million in stamp taxes.
“And take it from me, we need the money. That’s another reason I’m selling it, I need the money,”Ingraham stressed during the rally.
Ingraham reminded the crowd that the government has had to borrow”a lot of money”to keep all public servants employed and to maintain the level of public services. He said the sale of the BTC stake will give the government the chance to begin to pay on some of its debts.
He said BTC will pay its own way in taxes which means that the government will collect$3 out of every$100 it collects or charges to customers.
BTC will also pay property taxes on all its properties(from which it is currently exempt). Additionally, it will no longer benefit from exemption from taxes on capital imports, and it will pay business licence fees like other private companies, Ingraham added.
“FNMs, fellow Bahamians, this is a good deal for The Bahamas and Bahamians. You trust me,”he said.
“Just as the FNM ended the state monopoly on the broadcast media, the days of government control and domination of the telecommunications industry are over. And you know it. You no longer need BTC to talk to your children, family members or friends who are abroad. You can do that through your computers,”Ingraham said.
As previously reported, the government will make nine percent of BTC shares available to the public before the end of this year.
Ingraham encouraged Bahamians to buy the shares when they become available.
“It will be a good buy,”he added.
The government intends to wrap up debate on the BTC sale in the House of Assembly by Thursday.
Ingraham said previously that if FNM MPs vote against the sale, a snap election would be called.
“If FNM MPs do no wish to vote for it and wish to repudiate that then we will say that’we have said to the public of The Bahamas that we will do something that we are unable to do’and we will return to the public of The Bahamas the power that you gave us so that you can decide who will govern you, because if you have a party that commits in its manifesto that[it is]going to do something, but is unable to do so because of the candidates elected, then you have a right to have a say in the matter,”he said last week.