Lines Running Hot

Having announced in January that it was opening a tender to sell off a minimum 51% stake in BTC, in July the government invited interested parties to register their interest in the privatisation tender. Though it has not publicly announced a price on the controlling interest in BTC, analysts say the government would be looking at generating $200m or more from the sale.

Prime Minister Hubert Ingraham has said the government intends to use the funds from the sale to help pay off some of the state's debts, which have become a more pressing issue as the global economic crisis has seen revenue fall.

Currently BTC serves 334,000 wireless, 132,000 fixed-line and 18,500 broadband subscribers, as well as having an extensive catalogue of roaming agreements with 190 other service providers to meet the needs of the millions of visitors who come to the Bahamas annually.

While only a small operator by global standards, BTC is a profitable one, though like many companies in the sector it has seen earnings fall as a result of the global recession. In 2008 BTC posted a net profit of $21.1m, just under half of its result from the preceding year, with two-thirds of its profits coming from cellular services.

One of the appealing aspects of the BTC sale is the firm's monopoly on the telecommunications market, though this attraction will subsequently be diminished by the government's plans to expand the domestic market by introducing competition. Indeed, BTC will only be given two years in which to enjoy its exclusive status before having to face competition from two new mobile phone network licences awarded to new players.

According to local media reports at the end of November, at least six potential bidders lodged expressions of interest, though the committee tasked with overseeing the privatisation process deemed that only four be invited to progress to the next phase of the sell-off.

As it stands, UK-based communications firm Vodafone and One Equity Partners (OEP), JPMorgan Chase's private equity arm; Digicel Limited; Atlantic Tele-Network; and Trilogy International Partners are the four bidders still in the running to become the majority shareholder in BTC.

Initially, the government had said it wanted the privatisation completed by the end of 2009, though now it appears the sales process will continue well into the new year, given the need for due diligence to be completed before full bids can be submitted.

The current privatisation process is not the first time that the Bahamas has tried to sell off a stake of its state-owned phone company, with the most recent attempt being in 2003. The process was called off after none of the three bids received came close to the valuation placed on the stake put up for sale.

Another reason given for the failure was that the sale had not attracted a top-flight service provider as a credible bidder. At least this is not the case this time around, with Vodafone one of the world's largest telecommunications companies and Atlantic Tele-Network, Digicel and Trilogy all active in the Caribbean region and beyond.

Another advantage is that the Bahamas is better prepared to deal with a private telecommunications market. As part of the process of opening up the sector, the government has constituted an independent body to oversee the industry. Under legislation that came into force in mid-September, the Utilities Regulation and Competition Authority (URCA) is charged with having regulatory responsibilities for telecommunications, internet services, radio and television broadcasting.

On November 19, while attending a meeting of the URCA's board, the deputy prime minister and minister of foreign affairs, Brent Symonette, said the authority would work to ensure that consumer interests are safeguarded, and sustainable competition is encouraged and supported.

"I feel that the entire Bahamas will benefit from this new regulatory body that will oversee the electronic communications sector in our country," he said.

Having attracted the interest of some major players, and having put in place a regulatory regime to oversee the sector, now all the Bahamas needs to do is seal the deal in order to ring in a new era for telecommunications.