Digicel interested in BTL minority stake - report

Irish-owned mobile operator Digicel may be close to acquiring a minority stake in telco Belize Telemedia Limited (BTL), Belize newspaper Amandala reported, citing BTL's chairman Nestor Vasquez. According to the newspaper, the prospectus for the sale of shares will be publicly announced over the next couple of weeks. A Digicel team was reportedly given a tour of BTL in early September to exchange information under the terms of a non-disclosure agreement and were told that a controlling stake in BTL was not on the table. A Mexican investor has also expressed interest, Vasquez reportedly said, as has the BTL workers union BCWU. In August 2009, Belize's congress approved a controversial proposal to take over 94% of BTL. The proposal was submitted to congress by Prime Minister Dean Barrow, who explained the move was a necessary evil to improve the poor state of the country's telecoms industry, which he claimed had been strangled and prevented from growing because the monopoly BTL was controlled by businessman Michael Ashcroft. Blogspot Caribcomlaw on Monday cautioned Digicel from entering BTL, saying it could be a potential political risk, pointing to the government's propensity to interfere with the telecommunications industry and using last August's episode as a key example. Caribcomlaw also pointed out the legal risk for Digicel, underscoring that as a result of the recent nationalization of BTL, some of the former shareholders of BTL have instituted proceedings before the Belize Supreme Court to challenge the constitutionality of the legislation which expropriated their shareholdings. This means that Digicel's investment in BTL could potentially be invalidated if the lawsuits are successful. Thirdly the blog said that the investment would not fit with Digicel's traditional business strategy of going head-to-head with incumbent telecom operators in recently liberalized markets. Rather, it would become a minority shareholder in the incumbent operator. "This could restrict Digicel's ability to replicate the formula it used successfully across the Caribbean, Central American and Pacific, namely to target budget-conscious prepaid users with intense local marketing and sponsorship," it said. Caribcomlaw added that for the same reason Digicel had delayed entry to the Bahamas market, where state incumbent BTC is also seeking a strategic investor. Digicel execs refused to comment on the situation when contacted by BNamericas.