6 takeaways from the Government of Bahamas’ failed bid to regain control of the BTC
The Government of Bahamas’ failed attempt to regain control of the incumbent telecoms company offers many lessons. Six are discussed.
If you are a regular reader of our news roundup over the last six months or so, you would be aware of the Government of the Bahamas’ failed attempt to regain control of the Bahamas Telecommunications Company (BTC). For those who did not follow the saga, it began in 2011 with the sale of majority interest (51%) in the then fully government-owned incumbent telecoms carrier, the BTC, to Cable & Wireless Communications (CWC). Last year, following national elections and a change in political leadership, the new Government was of the view that the BTC should have remained 100% Bahamian. Hence it launched a campaign to regain majority interest in the company.
Following unsuccessful negotiations with Cable & Wireless PLC (C&W), CWC’s parent company, the Government of the Bahamas announced it would not longer be pursuing its bid to regain control of the BTC. However, throughout the entire episode and based on reports in the media, a number of lessons emerged that could be applied in a business context, but also to one’s personal or professional life.
1. Vacillation fosters uncertainty.
Although a change in political leadership can usher in new and different ideologies, to the onlooker, and as an entity, “the Government of the Bahamas” remained cohesive and unchanged. Hence in altering its stance regarding the sale of BTC, the Government would have appeared insincere, which could have contributed to the country’s downgraded outlook from international credit rating agencies.
Lesson: Although it is important to continually reassess your situation and the implications from previous decisions, reversing a decision within a relatively short period and without a significant change in the environment, can signal indecisiveness or poor decision-making skills. Businesses (and people) typically thrive when there is consistency and predictability in decisions. “Shifting the goal post” can lead to uncertainty and loss of confidence by affected parties, from which it might be difficult to recover.
2. Have a Plan B, plus a Plan C.
Without a doubt, the BTC was a cash cow for the Government of the Bahamas, as it would have full control over not only the company’s operations but also its profits. Similar to most Caribbean countries, the Bahamas has been experiencing a number of economic and fiscal challenges. Hence the loss of revenue from the BTC has been a significant loss to the Government, and possibly part of the impetus to recover a controlling stake in the company.
Lesson: Following any major decisions, changes from the previous circumstances or mode of operation are virtually inevitable. It is critical to try to anticipate what those changes might be, make adjustments and identify possible alternatives.
3. Do not underestimate your rival.
C&W may not be one of the world’s largest telecoms companies, but it is a respected firm, is well-resourced, and would generally be considered a legitimate contender in any situation in which it expresses an interest. Although the Government of the Bahamas’ negotiation strategy was not made public, it appeared that engagement with C&W broke down relatively soon after it commenced. Hence it must be questioned whether the Government fully understood its rival, or was adequately prepared to realise successful negotiations.
Lesson: Do not be cavalier in preparing for a potentially adversarial situation. It is important to understand your rival’s negotiating position and bargaining power, in order to ensure that you are properly equipped to address the contention or situation at hand.
4. Recognise how the situation has changed.
In the almost two years since CWC took control of the BTC, the focus has been on upgrading and expanding the latter’s network and introducing new services, for which considerable sums have been spent. As a result, the value of the BTC, as company – in terms of investment, revenues, impact on the market, customer base, etc. – would have appreciated considerably, and would have affected the extent to which the Government could successfully regain control of the company.
Lesson: The parameters and context under which an earlier decision was made might not apply in present day. To improve your preparation, do ensure that you fully recognise and understand how the situation under scrutiny has changed, and consider the likely impact on your decision-making.
5. Understand your own limitations.
Although the Government of the Bahamas might truly have wanted the BTC to revert to 100% ownership, it sought to recover at least 2% – to secure majority interest. In light of the following factors, it is likely that from the outset, the Government’s bargaining position would have been relatively weak:
- CWC/C&W had not expressed an interest in selling any of its BTC stock
- C&W has been concentrating its focus on strengthening its Caribbean assets
- C&W had publicly taken the position that for any company in which it has a stake, it must hold majority interest
- considerable investment and improvements had been made to the BTC, and
- the Government’s weakened financial position.
Lesson: Be realistic about your own bargaining power – what you bring to the table, as well as the elements you can leverage. Brutal honesty can result in a more rigorous assessment of a situation, which may lead to more creative alternatives that might not otherwise have been considered.
6. Pick your battles.
The return of BTC shares to the Government was a commitment made by the current administration, for which at a future date it may be called to answer. Although pursuing the matter might have appeared futile from the start, the Government might have felt somewhat compelled to try to fulfil its campaign promise. However, the fallout, based on press reports, suggested that the Government: did not understand the situation; did not have a plan for the Bahamas’ economic recovery; and was pursuing a matter that it could not win.
Lesson: Taking all earlier points into consideration, it is important to identify the situations that are likely to be resolved in your favour and those that will not. It is ill-advised to try to battle every contention, but rather to use your resources prudently to maximise your overall gains.
Image credits: The Elutheran;