Published On:Thursday, September 02, 2010

By NEIL HARTNELL

Tribune Business Editor

The Government was yesterday said to be "close" to signing an initial agreement - known as an 'agreement in principle' - to sell a majority stake in the Bahamas Telecommunications Company (BTC) to Cable & Wireless, with its privatisation committee making good progress in talks with the regional telecoms operator.

Sources close to developments told Tribune Business that the two parties were now "close" to potentially signing a 'Heads of Terms', which would set out the broad parameters of an agreement/deal for BTC's privatisation.

They denied, though, previous reports reaching this newspaper that an initial sales agreement between the Government and BTC had been "inked", saying such a move would be premature given the enhanced due diligence and negotiations taking place.

And even an initial 'agreement in principle' does not necessarily mean that a deal will be reached with Cable & Wireless, as there are numerous potential issues that could split the parties and remain to be reconciled.

Tribune Business revealed last month that the Government-appointed BTC privatisation committee was focusing on talks with Cable & Wireless Communications, the regional telco with operations in 13 other Caribbean countries, as the front-runner to acquire a stake in the state-owned incumbent.

T. B. Donaldson and Julian Francis, the committee's chairman and deputy chairman respectively, could not be reached by Tribune Business for comment yesterday.

However, this newspaper was informed earlier that the committee had been "working for a little while" with Cable & Wireless, having rejected earlier bids from the JP Morgan/Vodafone combination, plus the Atlantic Tele-Network/CFAL duo.

While the BTC privatisation committee believes Cable & Wireless is "very focused and serious" in its attempt to acquire a majority BTC stake, Tribune Business was told that the committee would also look at other serious prospects to ensure it did not "jump too soon", thereby making sure the Government got the best strategic partner both in terms of purchase price and terms/conditions.

Cable & Wireless was described by one source as "really well suited as the strategic partner. The committee believes they're very interested in this asset, and have the right idea about value, but there are some important issues that would need to be negotiated".

"Some very fruitful discussions" were said to have taken place between the BTC privatisation committee and Cable & Wireless, in a bid to get to a point where the Government might find its proposal attractive.

The Entertainment side Cable & Wireless brings, which is cable TV and programming, means it would likely be the candidate best-positioned to enable BTC to go head-to-head the quickest with Cable Bahamas.

Cable & Wireless' Caribbean operations generated $873 million in revenues and $270 million in operating income during the 12 months to December 31, 2009, holding gross margins at 74 per cent.

The Caribbean operations, which would be the ones to acquire BTC, have been restructured under new management, with a strong presence from Caribbean nationals, in addition to being rebranded as LIME - a slogan that stands for Landline, Mobile, Internet, Entertainment.

One attraction it might hold is that it operates in all four segments, unlike Vodafone, essentially a cellular operator, and Atlantic Tele-Network, a traditional landline, cellular, Internet operator.