Does the new BTC CEO, Mr. Leon Williams take the Bahamian public for fools? It certainly appears that way.
He’s telling us that liberalization of the telecommunications sector is a bad thing, that BTC is not ready, that revenue lines are flat, that 738 BTC employees could lose their jobs. In essence he’s saying that BTC would not be able to compete. At least that part may be true.
Before BTC was privatized, we were informed that it was one of the few profitable government corporations, bringing $30 million a year into the treasury coffers. A year after it was sold the CEO of BTC, Geoff Huston announced that government, even while holding only 49% of BTC shares, was making almost double its pre privatization profits.
The math is simple. Government has been receiving almost $60 million a year for their 49% share and Cable & Wireless (C&W) roughly another $60 million for their 51%. In total BTC has been making an estimated annual profit of $120 million.
C&W have known from day one that competition was part of the deal. It was in the contract. Three years have passed and the time has come to open the market to competition but BTC is not ready? How can that be? They have had three years to prepare. Perhaps the answer lies in Jamaica.
C&W had a 40 year monopoly in Jamaica until 2001 when the market was liberalized. Digicel (a competitor) took 100,000 C&W customers in 100 days! By offering cellular services at half the price of C&W, Digicel managed to take 70% of C&W customers in four years. C&W eventually cut their rates in half but the damage was done and they never recovered the dominant position they once held. They are still in business with 30% of the market share but they have had to downsize and become more efficient and of course less profitable.
So what’s the lesson here? BTC could improve their network, lower their prices and improve customer satisfaction as Mr. Williams acknowledges they must but there’s no incentive like competition to make this happen quickly.
C&W invested $210 million when they bought 51%of BTC and three years on have probably only recouped $180 million or so. They’re still in the red. They need up to another year to break even and then perhaps another one or two years to make a decent return on their investment. They are in no hurry to see the market liberalized. Unfortunately, neither is the government since that $60 million a year revenue stream is more important to them than lower prices and better service for the common man. Alas, we are stuck with lousy, expensive service for at least a few more years.
So Mr. Williams, please spare us the competition boogey man talk. We know what time it is.
Theo Tsavoussis
