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Advertisers Dupuch & Turnquest & Co.
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Telecommunications corporation to be ready for privatization by year’s end
According to Michael J. Symonette, president and chief executive officer of BaTelCo, during the first term of the FNM administration, it became apparent that before privatization of BaTelCo could occur, some changes would have to be made. “The company had been a monopoly forever and had a monopolistic mentality. The government determined that changes had to be made to get us out of thinking like a monopoly and start us thinking like a private enterprise.”
Thus, noted Symonette, privatization was deferred during the FNM’s first term. When the FNM won its second term in office, it was satisfied that changes had been made and that the time was right to begin the arduous process of privatization.
Symonette explained that the government hired two sets of consultants to advise on the privatization process, with a consortium headed by Deutsche Bank in London winning the contract. While both sets of consultants varied in their numerical estimations, both showed that a significant number of employees would need to be let go and that work not related to telecommunications, such as grounds work, should be outsourced. The timeline for finishing the process was projected to be ten months.
“When Deutsche Bank told us that if we divested our security and janitorial services we could operate with 500 employees, the government was shocked,” stated Symonette.
After long negotiations between BaTelCo, the government and the unions, severance packages in excess of 50 million were offered to those who applied and were accepted for voluntary retirement. BaTelCo reduced its number of employees from 1,978 to 1,100.
Some people who were let go were given small business loans by the government to start companies that could do contract work such as grounds keeping and maintenance to BaTelCo.
This entire process became difficult as those employees who remained at BaTelCo felt that they did not receive the same benefits as those who were let go. In early 1999, peaceful protests took place in the streets, sick-outs occurred, morale was low and telecommunications systems failed derailing the privatization process. When Hurricane Floyd hit in September, it set back the process further.
Now that The Bahamas has recovered from Floyd and emotions have cooled, the process is back on track. It is projected that by December 2000 an informational memo will be sent out and bidding process will be opened. The government will offer 49 percent to a private partner and the Bahamian public will have access to 51 percent of BaTelCo, which will be offered on the Bahamian Stock Exchange (BISX).
Symonette explained that one sticking point for Bahamians is charges for local calls. Local calls in the Bahamas have always been free, with international calls subsidizing the local market.
“The international community no longer supports that kind of operation, it thinks that toll calls should be a lot cheaper. In fact, the Federal Communications Commission has told the rest of the world that it has to lower toll charges. The international community by and large agrees and it is not prepared to subsidize local operation in any country. So the international community is obliged to lower toll rates and find other means of dealing with local operations,” said Symonette.
Many companies who do international business complain that rates in The Bahamas are exorbitantly high and will look forward to having better rates when BaTelCo is privatized.
“We are currently conducting a rate re-balancing study. We expect to get recommendations as to what charges we should apply for international calls and what charges we should charge for local calls. That will have to be a political decision,” he added.
“The sooner privatization is completed, the better,” said Symonette. “A strategic partner will have a great ability to influence the telecommunications development in the country. What we are looking for is a company that can provide state-of-the-art services to the Bahamian community at affordable prices on a consistent basis and to ensure that all of the islands, even if they are not profitable, have basic service.”
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Table of Contents The Bahamas: An established tourism and tax-free financial services center experiences a renaissance |
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In 1992, when the Free National Movement came to power, a mandate was made to privatize Bahamas Telecommunications Corp. (BaTelCo). The government realized that it would not have the capital investment needed to make telecommunications state-of-the-art in The Bahamas and that to continue to be a competitive financial center and to have cutting-edge technology quickly, a strategic partner would be necessary.