Moody's slams government's plans to regain 51% of BTC

Moody's has released a negative assessment of the Bahamas government's plans to regain the 51% majority control of the Bahamas Telecommunications Company ( BTC) sold to the UK's Cable & Wireless Communications ( C&WC) in April 2011, Bahamian press reported. In a global credit outlook, the ratings agency said the government's intentions represent a double credit negative for both the country and for parent company C&WC. "The buyout negotiations demonstrate the government's erratic approach to its participation in the telecom sector, and is a reversal of the government's previous position on divesting and liberalizing the sector," the report stated. "We had expected the liberalization of the telecommunications sector to occur in 2014. Such an about face is a signal of broader policy uncertainty and a deterioration of the operating climate for foreign investors," Moody's said. Bahamas Prime Minister Perry Christie reiterated his government's intentions last month at the Caribbean Association of National Telecommunication Organization's (Canto) 28th annual conference in Miami holding true to election promises that saw him come to power in May. The government currently owns 49% of BTC. Moody's said that from a financial point of view the fiscal costs of acquiring a 2% equity would be "relatively modest," or around US$250mn, should C&WC be willing to sell. But analysts in New York insisted that the purchase, penalty fees and potential litigation costs place the economy in jeopardy "at a time when its finances are deteriorating." According to the ratings agency, the Bahamian fiscal deficit will be around 7.4% of GDP in 2012, and government debt has accelerated to over 51% of GDP from around 30% in 2007. And losing that equity interest, however, would be a "significant credit negative" for C&WC as it would prevent the company from being able to fully consolidate BTC in its audited accounts, Moody's said. BTC accounted for 12% of C&WC's fully consolidated revenues and 10% of its Ebitda in fiscal 2012, which ended March 31, and is the company's only Caribbean asset that is currently performing strong, the Moody's report said. Last week, Christie appointed a negotiating team ahead of formal talks with C&WC and said talks are due to start mid-August. C&WC has also reportedly named its negotiating team. When contacted by BNamericas, C&WC would not comment. At a recent press conference, former Prime Minister Hubert Ingraham called the government's plan to get a majority of shares back "political fluff." The Nassau Guardian reported BTC CEO Geoff Houston as saying that the government is getting almost double the profits as a 49% shareholder as it did when it was a full owner.