Cable & Wireless agrees to sell Trinidad asset
Facing regulatory hurdles in Trinidad, Cable & Wireless Communications Plc says it is willing to sell its stake in that country's largest telecoms within the timeline laid down.
The Telecommunications Authority of Trinidad (TATT) and Tobago has indicated that it would only approve CWC's acquisition of Columbus International assets in that market if the British telecom disposed of its 49 per cent holdings in Telecommunications Services of Trinidad and Tobago (TSTT).
TATT has prescribed a timeline of one year for the disposal, with a possible extension to 18 months.
CWC owns Trinidad's largest telecoms in partnership with National Enterprises Limited, a government-owned company which is listed on the stock exchange in Port of Spain.
"We are confident that our shareholding in TSTT will prove attractive to a number of investors," CWC said in a release. The company otherwise declined comment.
NEL will have first right of refusal.
TSTT was a loss-maker last year for its owners, having shed TT$506 million at year-ending March 2014, according to market disclosures by NEL that also indicated that the telecom's performance was linked to a five-year reorganisation programme and that it was expected to return to profit at FY 2015. CWC's share of the 2014 losses would have amounted to TT$247.9 million.
TATT had initially denied its approval of the CWC/Columbus International merger, but pressed to reconsider, the regulator said two weeks ago that it could get to yes if CWC sold its TSTT stake.
Columbus operates in that market through Columbus Communications Trinidad Limited (CCTL) trading as Flow, and Columbus Networks International (Trinidad) Limited (CNITL). Those two entities would merge with CWC subsidiary Cable and Wireless West Indies (CWWI).
CWC said in its response to TATT's requirement that it fully recognised that its shareholding in TSTT "would need to be neutralised either by a blind trust or by disposal of our shares, matters that were previously considered by the company. We look forward to working with the majority shareholder, NEL, to agree a fair process for disposal, as embodied in our existing Shareholder Agreement, and are supportive of a disposal process that permits an orderly sale to be concluded in a period of not more than 18 months."
Jamaica is the only jurisdiction so far to approve the CWC's regional acquisition of Columbus International.
On Tuesday, Minister of Science Technology Energy and Mining Phillip Paulwell said the substantive difference between Jamaica and Trinidad was that CWC's operation in Jamaica was a wholly private entity, while in Trinidad it shared ownership of a company with the government of Trinidad.
Paulwell signed off on the transfer of licence required to facilitate the merger soon after the new year.
TATT had initially denied its approval in February, saying that after in-depth economic and legal analysis, it found that the tie-up would have resulted in "substantial lessening of competition or adverse effects may reasonably be expected to result".
suspension of rights
It reaffirmed those concerns a month later, but issued a release saying it would "not unreasonably withhold its approval" if CWC were to suspend its shareholder rights and agree to completely divest its 49 per cent stake in TSTT.
The suspension of rights would include the naming of directors, but not the collection of dividends.
CWC must also provide "full details of financial investment, source of funds, projects and expansion plans for CCTL and CNITL for the first five years period" to TATT.
CWC operates in 17 countries throughout the Caribbean, Latin America and the Seychelles. Columbus International is a privately-owned fibre-based telecommunications and technology services provider operating in the Caribbean, Central America and Andean region. The acquisition is valued at US$3.025 billion, including debt.