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Winning $62.5m bid leaves Cable poised to dominate market

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Cable Bahamas was last night poised to become the Bahamas’ most dominant communications provider, after its $62.5 million spectrum bid helped to see off its last remaining rival for the country’s second mobile licence.

The Government, in a release that appeared timed for the TV (ZNS) news, confirmed that after 112 rounds of bidding, the BISX-listed company’s offer combined with its score from the initial technical/financial evaluation had been enough to see off Virgin Mobile (Bahamas).

“At the end of the auction, the Standing High Bidder was determined to be Cable Bahamas, having submitted a financial bid of B$62.5 million and obtaining the highest combined score of the two bidders,” the Government said.

The Prime Minister had been advised by the Utilities Regulation and Competition Authority (URCA) of the auction outcome on Friday - the day the process closed.

Senior Cable Bahamas executives were last night tight-lipped when contacted by Tribune Business, explaining that there were still numerous non-disclosure clauses surrounding the mobile licence process that they did not want to risk violating.

But, while none had seen the Government’s release, there was little disguising the elated tone in their voices. For the announcement puts Cable Bahamas in position to become the Bahamas’ second ‘quadruple play’ operator, going head-to-head with the Bahamas Telecommunications Company (BTC) in all markets - mobile, fixed-line voice, TV and Internet.

The statement, issued on behalf of the Cellular Liberalisation Task Force, added that Cable Bahamas now has to meet certain pre-conditions before it can be awarded its 15-year mobile licence, which is expected to happen by year-end 2015.

Among those conditions is Cable Bahamas’ relationship with the so-called ‘HoldingCo’, the entity that has been formed to hold a 51 per cent majority equity stake on behalf of the Bahamian people in the new mobile operator.

Cable Bahamas, which will have Board and management control, must reach a shareholders’ agreement with HoldingCo and comply with certain terms and conditions in that document. The Task Force is now seeking investors for HoldingCo.

While Cable Bahamas can still be disqualified if it fails to complete the remaining conditions for licensing, the BISX-listed company is unlikely to let the prize slip through its hands now.

The biggest winners from its success, apart from its 2,400 shareholders (led by the National Insurance Board, with its near-25 per cent stake), will be Bahamian mobile consumers.

They will enjoy choice in terms of mobile service provider for the first time come 2016, which is when Cable Bahamas will start rolling out nationwide services - a move that should result in the lower prices, and improved products and services, that competition normally brings.

Cable Bahamas will likely expand its staff to handle its new product offering, while monies will be spent with contractors and others on the construction of its new nationwide mobile network. Liberalisation/deregulation thus boosts economies in the short and long-run, too.

From a market perspective, while mobile deregulation has been a long-time coming, the selection of Cable Bahamas as the second licence winner effectively turns the Bahamian communications market into a duopoly where two ‘giants’ - itself and BTC - will slug it out for dominance. The Bahamas’ population size acts as a barrier to a third major entrant.

Most observers believed that Cable Bahamas was the likeliest winner of the second mobile licence once cellular giant, Digicel, dropped out of the race - a move likely taken because it felt the infrastructure roll-out timetable and majority Bahamian ownership conditions too onerous.

The biggest loser from the mobile licence outcome, apart from Virgin Mobile (Bahamas), is likely to be BTC.

Besides being set to lose a last lucrative monopoly that currently accounts for near-75 per cent of its top-line, the suspicion is that BTC would have preferred Virgin Mobile (Bahamas) as its competitor, rather than Cable Bahamas or Digicel.

Little was known about Virgin Mobile (Bahamas), other than one of its principals was John Gregg, a major figure in the Bluewater Communications Holding group that sought to buy BTC under the first Christie administration.

The Junkanoo Mobile group, headed by former BTC executive Franklyn Winder, was also folded into Virgin Mobile (Bahamas). Many observers believed it was going to operate as a Mobile Virtual Network Operator (MVNO), running its services via BTC’s infrastructure and acting as a reseller of the incumbent’s minutes.

Phil Bentley, chief executive of BTC’s controlling shareholder, Cable & Wireless Communications (CWC), has previously been relatively dismissive of Cable Bahamas’ so-called inexperience in mobile provision.

Yet the same could have been said when it entered fixed-line voice services, only for the BISX-listed provider to take around 30 per cent market share in two years.

Should Cable Bahamas repeat that performance in mobile, it would mean that $80-$90 million would be slashed from BTC’s existing top-line by 2018 - albeit after the company has enjoyed five years of monopoly post-privatitsation in 2011.

And BTC has little immediate opportunity for a riposte, given that the BISX-listed company is the dominant player in TV and Internet - two markets where it is trying to make headway.

Further armed with its $100 million worth of Florida acquisitions, Cable Bahamas appears well-positioned to squeeze BTC and emerge as the dominant ‘quad player’ in a consolidated Bahamian communications market.

Comments

DonAnthony 7 years, 3 months ago

Really good news in giving the license to a 100% Bahamian owned company. The 51% of shares invested in the new holding company should be offered to the general public and not just to select institutional and high net worth individuals as appears to be the plan of the Task Force. The shares should be allocated from the bottom up, meaning that those Bahamians with the smallest orders should be filled first, before the big boys! This way the shareholder base will be as broad as possible and will give the little man in the Bahamas an opportunity to benefit. This is the way cable Bahamas shares were allocated in the initial public offering under the fnm govt. twenty years ago. Anything less would be dishonest and simply reserving the economic pie for the select few rich and politically connected. PLP do the fair and honest thing and allow the shares to be offered to ALL Bahamians and allocated from the BOTTOM up, so that small orders are filled first.

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asiseeit 7 years, 3 months ago

Don what you say about the shares going to the little man makes sense. It will be very telling who the PLP allow to invest in "NewCo", if it does like the Port and make sure all who want to invest can or if they just look out for their people as usual. Knowing the PLP they will just look out for PLP's as always.

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vinceP 7 years, 3 months ago

This is in fact excellent news, However; i do not trust this PLP Government. Cable Bahamas Ltd has been a publicly traded company for as long as I can remember, so please tell me what is the point of "NewCo" retaining 51% shares, which is supposed to be held for the Bahamian people to purchase, when in fact, any Bahamian can go and purchase shares in Cable Bahamas Ltd right now? This "NewCo" thing that the Government has concocted is really stink!

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BahamaPundit 7 years, 3 months ago

Has the liberalisation of cellular benefited Bahamians? Jobs have been lost, call prices have not decreased at all, and quality of calls remains exactly the same -- poor. The concrete answer is NO. It is clear that the divesting of BTC from the Bahamian people was a well planned scheme. The people have been robbed! One of their most valuable assets has been handed over to private interest groups.

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BahamaPundit 7 years, 3 months ago

What we're seeing more and more of in this country is a troubling trend of the Government vesting power in a small group of private individuals at the expense of the majority of Bahamians. This was the case with the numbers licensing: an elite group were given ownership of what should have been illegal, or at least a publicly run lottery. Now, we are seeing it in the telecoms, where a public company (owned by the public at large) has been removed from the peoples' pockets and given to a few private elites. This dangeous dance of creating billionaires at the expense of the billions has been shown a democratic failure in both the US and South America 1%, where wealth disparity is at an all time high, leading to social unrest, monopolies and general unfairness.

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