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Bahamas: E-Commerce

Telecommunications

A key step in the Bahamas' telecommunications privatisation process was the establishment of the Public Utilities Commission tasked with the regulation of the electricity, telecommunications and water sectors. The PUC's first task is to address the telecommunications sector. Speaking in January, PUC Executive Director George Moss recalled that in October 2002 the Government had launched the sale process for 49% of the state-owned Bahamas Telecommunications Company (BTC) with a view to completing the process in 2003.

Mr Moss listed the benefits of privatization as the raising of revenues for the Public Treasury, increased efficiency of a state-owned enterprise, expanded investment by private sector financing, attraction of foreign investment, greater commercial orientation of the company, improved responsiveness to consumers, human resources development, and knowledge transfer to nationals.

Underlining the government's commitment to privatisation, Mr Moss said: 'Most countries, including The Bahamas, accept that the opening of their telecommunications market to the private sector has dramatized the need for independent, well staffed and financed regulatory agencies. This conviction is confirmed by the extraordinary growth in the number of telecommunications regulatory agencies. I understand that there are now over 100 independent regulatory agencies worldwide compared with 12 in 1990. The trend is clear.'

Mr Moss noted that the PUC had taken seriously its duty to provide access to the telecommunications market by way of licensing and the lowering of barriers to market entry, pointing out that the PUC had reduced Internet service licence fees from $10,000 to $2,600; and paging and trunking licence fees from $5,000 to $1,300. He outlined the PUC's more significant objectives as:

  • Ensuring that telecommunications services are satisfactory and the prices are reasonable;
  • Promoting competition among providers of telecommunications services and protecting the interests of consumers; and
  • Ensuring that efficient operators are able to finance their operations from reasonable prices.

'In March 2000,' said Mr Moss, 'there were only three (3) Internet service providers; now we have sixteen (16). The residential Internet service package that cost $100 per month in 2000 is now available for about $20, a decrease of 80%. Similarly, business packages have been reduced from $150 to $35, a decrease of 77%.'

With respect to international leased circuits using submarine cables, in March 2000 BTC was the only operator but Caribbean Crossing was licensed in April 2001, said the Minister. Since then, he pointed out, the price of a 64 kbps leased circuit had fallen from $3,010 per month to $1,062, a decrease of 65%. Similarly, the price of a 1.544 Mbps circuit had fallen from $29,400 to $10,500, a decrease of 64%. As for cellular service, the monthly access fee had been reduced from $45 in 2000 to the present price of $10 and airtime reduced from an average of 38¢/minute to 15¢/minute.

In August, 2005, a contract was signed between BaTelCo and TYCO Telecommunications to install a $58.9 million fiber optic cable connecting 14 islands of The Bahamas.

The submarine fiber optic cable referred to as Bahamas Domestic Submarine Network International (BDSNi), has a lifespan of 25 years and is to be installed in three phases. Phase I was scheduled for completion at the end of December, 2005, and Phase II was expected to be completed by the end of June, 2006.

BTC co-owns and operates the Bahama II fibre optic cable that links New Providence and Grand Bahama with Vero Beach, Florida, thereby affording interconnection with major telecommunications carriers.

Additionally, Cable Bahamas, the exclusive cable provider in Freeport until 2054, has created a national and international submarine fibre system that is managed by its wholly-owned subsidiary Caribbean Crossings. This submarine fibre network utilises Freeport as its core distribution hub, because of Freeport’s advantageous location that bridges The Bahamas with the rest of the world.

Caribbean Crossings is also presently developing a second submarine link between Grand Bahama and Florida which will even further enhance the offering of The Bahamas in general and Freeport in particular.

Towards the end of 2002, the government launched an advertising campaign to find a strategic partner and manager for BTC, looking to sell a 49% stake in the company to the right partner, and to transfer management control.

According to the invitation to register interest in the privatisation of the Bahamian telecommunications sector, such a partner would: 'provide the technical and financial resources and management capabilities to enable the BTC to attain the highest levels of international and national competitiveness and performance in the telecommunications sector'. When bids closed in February, 2003, four bidders had entered the ring: the BahamaTel Consortium, Blue Telecommunications (Bahamas) Ltd, Cable & Wireless PLC, and Trans World TeleCom Bahamas Ltd.

Local analysts have estimated the telecommunications company's worth at between $251 million and $560 million. A strategic partner from the private sector will be able to provide capital development and technological guidance, and should allow the monopoly provider to increase its efficiency and the range of services offered, thereby boosting its earning power still further, says the government.

In early 2004, the government ended the formal privatization process, but in May that year, former Prime Minister Perry Christie made it clear that this does not mean that the government had abandoned the privatisation of BTC. “On the contrary, the privatisation of BTC remains an important item of my government’s economic agenda,” he said. “Accordingly, the privatisation will be re-launched as soon as circumstances reasonably allow and on a basis, moreover, that will take adequate account of the lessons that were learned in the earlier process.”

Former Minister of State for Finance James Smith indicated in November 2004 that while there is no ‘formal privatisation process’ in place, the government is still open to favourable bids.

The PUC has granted telecommuncations licenses to SRG (System Resource Group) and Cable Bahamas. SRG has recently announced that it is starting its business and residential services and intends to compete head on with BTC.

SRG President Paul Hutton-Ashkenny said his company’s entrance into the telecom industry is an indication that the government sees the liberalisation of the telecommunications sector as a critical pre-condition for achieving economic development in the country.

Industry sources say that it is most urgent that the government recognize the extreme dilemma that the entire telecom industry and the financial and business community would suffer if the government does not move quickly to relinquish its control of BTC and put it into the hands of an entity that has the financial capabilities, management and technical know-how to allow the company to be able to compete in the local market against SRG, Cable Bahamas and other competitors that are soon to come.

Smith said the move toward privatisation was an ongoing exercise. “It’s just that it’s not going to be done in the way it was done originally,” he said. “If a prospective buyer came along with the right attitude and the right price, I’m sure the government would be obliged to entertain the bid. So the process may have come basically to a halt, but not the intent.”

In February, 2011, the government of the Bahamas published a press release stating that it had " today concluded the Agreement by which it has contracted to sell a 51% interest in the Bahamas Telecommunications Company Ltd (BTC) to Cable and Wireless Communications Plc (CWC). The transaction is subject to Parliamentary and regulatory approvals."

The statement continued: "CWC, who will acquire the 51% interest in BTC through CWC Bahamas Holdings Ltd, a Bahamian holding company, will pay a consideration of US$210 million plus Bahamian stamp duty of US $7 million on the transaction.

CWC is a global, full-service communications company which operates leading communications businesses through four regional units; the Caribbean, Panama, Macau and Monaco & Islands. Its services include mobile, broadband and domestic and international fixed line services in most of its markets as well as pay-TV, data centre and hosting, carrier and managed service solutions. CWC is a FTSE 250 communications company with approximately $2.3 billion revenues, operating in 38 countries (13 of which are in the Caribbean) providing fixed line, mobile, broadband and entertainment services. It has 8.3 million mobile, 1.8 million fixed line and 600,000 broadband customers. CWC has been in the telecoms business for more than 140 years, and is a trade buyer with a long term strategy and interest. CWC is expected to bring synergies to BTC in terms of procurement savings, administration savings, IT implementation and support, network operations support and others.

On completion of the transaction, expected to be around the end of March 2011, CWC will be primarily responsible for the day-to-day management and operation of BTC under the terms of a Shareholders‘ Agreement with the Government."

 

 

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