The Tribune

The creation, organisation, staffing and financing of NewCo in less than a year suggest a model pattern for other private-public joint ventures in the Bahamian economy, Richard Coulson says

Ten days ago, the spacious grounds of the former Holy Cross Church complex near Soldier Road were throbbing to celebrations by the new business tenant: aliv was being launched as the brand name of the new mobile service that will compete with Bahamas Telecommunications Company (BTC) .

In less than a year aliv, under its corporate name NewCo15Limited (NewCo), has sprung from nowhere into an active venture capitalised at $125 million, a story of commercial speed rare in the Bahamas.

In 2015, Cable Bahamas (CB) was approved by government as recipient of the country’s second mobile licence, but under a radically different ownership structure. Rather than integrating the mobile business into its existing TV/Internet/Landline activities, CB spun it off into NewCo, owned 48.25 per cent by CB and 51.75 per cent by the Bahamian public, with the requirement that under the supervision of the Utilities Regulation and Competition Authority (URCA) it must be up and running by October, later extended to November to allow for Hurricane Matthew damages.

Since CB did not have the technical staff experienced in operating a mobile business, it immediately started a recruiting campaign. The first NewCo hires were three foreign executives who had spent years in various Caribbean countries operating networks for Digicel, the mobile phone specialist company. This initial cadre, headed by Damian Blackburn, 45, veteran of the challenging Haitian scene, immediately set to work interviewing, signing up and training Bahamians, so that NewCo now has more than 150 local staff and 11 expatriates in New Providence and Freeport, Grand Bahama, active in marketing, technology, finance and administration. Although CB is officially designated to have managerial responsibility, in reality NewCo will act as virtually a stand-alone enterprise with its own corporate image.

Friday’s festivities began with an informal lunch offered to Newco employees, CB executives and invited guests in the company auditorium, vivid with yellow and blue shirts bearing the brand-new aliv logo, which also emblazoned the nearby tents. The name had been kept confidential until the night before, so that the decorations were only completed early Friday when surprised staffers were given their colourful garments. In the parking area, an aliv banner hung from a gleaming medium-height transmission tower mounted on a wheeled platform, ready to be towed anywhere.

Lunch was followed by the official inauguration before a group of dignitaries in the headquarters forum, including CB boss Anthony Butler and several executives from the Florida subsidiary. They viewed a large screen where simultaneous ceremonies were beamed in from Grand Bahama. After an introduction by NewCo Chairman Alfred Butler (a Director of CB and businessman heir to the late Sir Milo), Managing Director Blackburn summarised launching achievements before turning the microphone over to Vice President for Marketing and Communications Johnny Ingle.

The articulate Irishman elaborated on the company’s mission and specific objectives, referring to completion of towers in New Providence and in Freeport and to creation of various seven- and 30-day calling plans with prices and terms clearly designed to compete with the offerings from BTC. He showed an artist’s rendering of retail stores where these plans would be sold together with a selection of smartphones. A subsequent release provided that some 60 locations will soon sell aliv services across New Providence, Grand Bahama, Abaco and Eleuthera, starting with six full-service stores to be opened in the capital on November 23, from Old Fort Bay to Marathon Mall.

Prime Minister Perry Christie closed the proceedings with a friendly welcome to NewCo, emphasising all the advantages that wider personal communications offer to an increasingly technological world. He made no specific reference to BTC, government’s own entry in the field, while underlining the improvements that open competition can bring both to competitors and to the market as a whole. Recognising the team effort involved, Mr Christie gave a gracious accolade to the dignified lady sitting in the front row, Ruth Millar, the retired long-time public servant who as Cabinet Secretary spearheaded the Liberalisation Task Force that approved the licence grant to CB.

He also mentioned one important piece of unfinished business, making clear that government had provided over half (51.75 per cent, about $63 million) of NewCo’s capital strictly as a “temporary” measure, to be held in the financial vehicle HoldingCo Ltd, pending its sale to private investors. He looked down at Jimmy Campbell, the Holding Co Chairman, indicating his responsibility to get this sale completed. Since HoldingCo’s only income will come from NewCo, a brand new operation with exciting prospects but no track record of earnings history, the sale cannot be done as a “public offering” but will be limited to a private placement with institutions like pension funds as well as wealthy private investors. This sizeable placement will require the best brains and hard work of our experienced investment bankers.

It is surprising that months after the organisation of HoldingCo and NewCo, no mandate has yet been granted to arrange this financing. The delay does not affect NewCo’s build-out plans, since the funds have already been committed by government, but it could hold up marketing efforts to the subscribing public, as the true majority owners of NewCo are not yet known. Bahamians can be hesitant to commit to a company whose owner they cannot identify. Mr Campbell, and his financial advisor former PricewaterhouseCoopers partner Gowon Bowe, had a gentle hint from the Prime Minister to get a move on.

The day had a lively windup with a Junkanoo marching band leading all celebrants to a spacious tent well stocked with up-market food and specialty drinks. Spirited conversation flowed freely, with Attorney-General Allyson Maynard enjoying herself and even Mrs Millar staying for a chat. Music and dancing continued into early hours of darkness.

Cheerful launching celebrations are, of course, no guarantee of eventual success, which can only be proved after several months of operation with a growing list of satisfied subscribers. BTC is certain to use its local know-how and US-source expertise to fight hard to retain its market share of the mobile business, and it enjoys the normal edge of existing customers reluctant to make a change. But if the visible energy and enthusiasm of all the NewCo staff, from top to bottom, is taken as any indication, plus the results accomplished in just a few months, aliv would seem well positioned to become a major player.

The creation, organisation, staffing and financing of NewCo in less than a year suggest a similar pattern for other private-public joint ventures in our economy. In the energy sector, the US company PowerSecure is just a manager/consultant, not a true partner. Why not change the arrangement? Why not bring in a well-connected foreign airline as managing partner of Bahamasair, then sell shares to our public? Why not have a foreign broadcasting company do the same thing with ZNS? And, at long last, invite a partner to revive the “zombie zone” of downtown eastern Bay Street?

Can ideas like this be fitted into our much-advertised National Development Plan?

• Richard Coulson is a retired lawyer and investment banker born in Nassau and from a long line of Bahamians. He is a financial consultant and author of A Corkscrew Life - adventures of a travelling financier. He is a shareholder of Cable Bahamas.