The deal for Cable & Wireless Communications (CWC) to take a 51% stake in Bahamas Telecommunications Company (BTC) is facing a growing backlash from unions and opposition politicians.
Unions have been running protests against the deal for over two weeks….
The deal for Cable & Wireless Communications (CWC) to take a 51% stake in Bahamas Telecommunications Company (BTC) is facing a growing backlash from unions and opposition politicians.
Unions have been running protests against the deal for over two weeks. A local Bahamas newspaper, The Tribune, reported today that one of the major union leaders, William Carroll of the Public Managers Union (BCPMU) said that BTC should remain under the control of the Bahamas people and that the union will continue to object to BTC’s sale.
Unions are concerned that jobs will be lost at BTC if CWC does take the 51% stake. Opposition politicians have also expressed concerns that the government has not got a good deal from CWC.
In 2007, the previous Bahamas government (led by the Progressive Liberal Party, PLP) proposed a contract for Bluewater Ventures, a company based in Jersey in the Channel Islands, to take over 49% of BTC with a bid of US$260m.
This contract was terminated when the present government, headed by the Free National Movement, took power later in May 2007.
In early December this year, the government came to a memorandum of understanding with CWC to acquire the 51% stake for just US$210m.
On December 15, it issued a statement aiming “to bring an end to the deceit that is now becoming a national debate” regarding its decision on CWC’s acquisition of the stake.
It said that at the time of Bluewater’s bid, BTC had US$70m in cash reserves, and that there was no allowance in the deal for Bluewater to remove that sum. It argued that this meant that the net cash transaction would be US$190m.
Out of this US$190m, US$25m would be deferred for five years and US$15m would be deferred for six years. So the country would have received just US$150m initially for the stake.
The government also defended the fact that CWC would be given a majority stake in BTC, while Bluewater’s deal was to acquire just 49%.
It said that Bluewater would have had control over management of the company even though it would have not had a majority stake.
It made clear that it saw CWC as a more attractive partner than Bluewater. It said that it did know the identities of Bluewater’s shareholders, and that (at the time of the deal) Bluewater “had no financial statements and no organisational support”.
“It is mind-boggling that a decision was once taken by a Government of the Bahamas to sell BTC to this entity,” the current government stated.
On its website, Bluewater Ventures claims to have combined annual revenues of over US$20bn and more than 75,000 employees.
The Bahamas government did, however, offer strong support for CWC.
“CWC has the economies of scale and the purchasing power to give strong support to BTC in an aggressive competitive environment.”
The government’s statement was attacked by the opposition PLP, which called it “yet another attempt to mislead and misdirect the public’s attention from the central issues concerning this matter of national importance”.
It said in a statement on December 16 that the net price of CWC’s offer was much less than the US$210m being touted, when BTC’s pension liablities of US$60m were taken into account.
It also said that Cable & Wireless had “an established reputation for aggravating its workforce”.
The demerger of Cable & Wireless took place earlier this year, with the company splitting in two: Cable & Wireless Worldwide, a provider of communications infrastructure, and Cable & Wireless Communications (CWC), a telco operating in the Caribbean, Macau, the Monaco area and Panama.
The PLP called for an independent expert to be brought in to analyse the Bluewater and CWC deals.
It added that “above all, the Unions and the majority of the people in the country are against the sale of BTC to CWC”.
CWC said earlier in December that it expected to complete its acquisition of the 51% stake in the first quarter of 2011, after completing due diligence, finalising contract terms and getting regulatory clearance.
