Guyana govt prepares to battle GT&T to end monopoly

Guyana's government will begin negotiations on Friday to end a 26-year old monopoly on the fixed line market, the last one in the English-speaking Caribbean.

GT&T, owned by US-based ATN International, has held sway in fixed line, international voice and data markets since 1990 and had its 20-year license automatically renewed again in 2010.

However, introducing fresh competition to these markets is at the core of the telecoms reform signed into law on August 5 - and that means modifying GT&T's license, albeit not stated directly.

"The legislation creates an environment within which a monopoly would be contrary," Guyana's minister of public communications Catherine Hughes told BNamericas in an interview.

Last month, the government invited GT&T to enter negotiations and the latter accepted. However, GT&T has made it clear it will not accept modifications to its license on any terms and the government could be facing drawn out and complex talks.

When contacted by BNamericas, ATN International preferred not to comment on the negotiations, but pointed to its previous comments in SEC filings. "The legislation that passed does not include a provision that permits other telecommunications carriers to receive licenses automatically upon signing of the legislation, nor does it have the effect of terminating the company's exclusive license," the company said in a November filing.

"Instead the legislation as passed requires the Minister of Telecommunications to conduct further proceedings and issue implementing orders to enact the various provisions of the legislation," it added.

Hughes assured BNamericas that the regulations accompanying the reforms would be ready by the end of the first quarter of 2017.

The telecoms reform will also create a new telecoms watchdog that will eclipse the National Frequency Management Unit (NFMU) and assume oversight of the sector in tandem with the Public Utilities Commission (PUC).

LEGAL, TAX ISSUES AND COMPENSATION

Hughes said the government wants to negotiate the end of the monopoly through dialogue, but has some aces up its sleeve if GT&T decides to play hardball.

"There are a couple of tax issues that are outstanding. We've said we don't want to bring the tax issues to the negotiating table because it's not really under my mandate; tax offices are totally independent. We'd rather sit around the table in good faith," Hughes said.

In its SEC filing, ATN recognized that GTT has been involved in several legal claims regarding its tax filings with the Guyana Revenue Authority dating back to 1991 regarding the deductibility of intercompany advisory fees, as well as other tax assessments.

"Should GTT be held liable for any of the disputed tax assessments, totaling US$44.1mn, the company believes that the government of Guyana would then be obligated to reimburse GTT for any amounts necessary to ensure that GTT's return on investment was no less than 15% per annum for the relevant periods," ATN said.

ATN added that it believes that "some adverse outcome is probable" and has set aside US$5mn as of September 30, 2016 for these matters.

DIGICEL

Irish-owned Digicel is the other mobile operator in Guyana and has been engaged in legal disputes with GT&T for years over its exclusivity. On the other hand, GT&T has accused Digicel of using illegal bypass operations.

GT&T's monopoly on the long distance voice and data telephony markets came under serious scrutiny after the Americas II fiber optic cable suffered damage in May 2008. As an emergency measure Digicel was granted an interim long distance license by Guyana's government to route communications from the country via satellite.