An­tho­ny Wil­son

T&T's telecom­mu­ni­ca­tions reg­u­la­tor yes­ter­day ex­pressed deep con­cerns about the pos­si­ble im­pact Ca­ble & Wire­less Com­mu­ni­ca­tions' pro­posed US$3 bil­lion ac­qui­si­tion of Colum­bus In­ter­na­tion­al would have on the com­pet­i­tive en­vi­ron­ment for the tele­com in­dus­try in T&T.But the Telecom­mu­ni­ca­tions Au­thor­i­ty of T&T (TATT) said it "shall not un­rea­son­ably with­hold its ap­proval" of the trans­ac­tion if CWC were to sus­pend its share­hold­er rights with re­gard to its 49 per cent stake in ma­jor­i­ty state-owned TSTT, among oth­er con­di­tions.

In its first sub­stan­tive state­ment on the pro­posed mega tele­com merg­er, which was an­nounced last No­vem­ber, TATT made it clear that an "in-depth eco­nom­ic and le­gal analy­sis" of the im­pli­ca­tions of the trans­ac­tion on the lo­cal tele­com mar­ket "found that sub­stan­tial less­en­ing of com­pe­ti­tion or ad­verse ef­fects may rea­son­ably be ex­pect­ed to re­sult from the pro­posed ac­qui­si­tion of Colum­bus by CWC."

As such, the au­thor­i­ty said it did not ap­prove the ap­pli­ca­tion for the change of con­trol of Colum­bus' lo­cal op­er­a­tions, which trade as FLOW, at its board meet­ing on Feb­ru­ary 9. Fol­low­ing that board meet­ing, CWC and Colum­bus re­quest­ed that TATT re­con­sid­er its re­jec­tion of the change of con­trol ap­pli­ca­tion.

TATT is re­quired to ap­prove the change of con­trol of Colum­bus that would re­sult from its ac­qui­si­tion by CWC. That ap­proval is one of the con­di­tions prece­dent of the trans­ac­tion be­ing con­clud­ed.TATT said at a board meet­ing on Wednes­day, it "re­solved that should the 49 per cent share­hold­ing by CWC in TSTT re­main un­changed, then pur­suant to sec­tion 22(1) (c) of the Act, the ap­pli­ca­tion for change of con­trol is not ap­proved."

The au­thor­i­ty said it would not with­hold its ap­proval pro­vid­ed the fol­low­ing ac­tions are tak­en:

(1) That the ap­pli­cants sub­mit an agree­ment for the com­plete di­vest­ment of CWC's share­hold­ing of 49 per cent in TSTT, in con­sul­ta­tion with the ma­jor­i­ty share­hold­er Na­tion­al En­ter­pris­es Ltd (NEL) in ac­cor­dance with the share­hold­ers'agree­ment and to be ap­proved in writ­ing by the Au­thor­i­ty, such ap­proval to not be un­rea­son­ably with­held;

(2) With­in the agree­ment to be made with NEL, as an un­der­tak­ing on the part of the ap­pli­cants to en­sure the mit­i­ga­tion of cir­cum­stances which may lead to the sub­stan­tial less­en­ing of com­pe­ti­tion or ad­verse ef­fects–

(a) there shall be an im­me­di­ate stay to the ex­er­cise of share­hold­er rights in gen­er­al by CWC and un­der the share­hold­ers' agree­ment in­clud­ing the right to ap­point di­rec­tors, save and ex­cept the right to div­i­dends and cer­tain lim­it­ed rights for statu­to­ry re­quire­ments. Such amend­ments must form an amend­ment to the TSTT share­hold­ers' agree­ment to be sub­mit­ted to the Au­thor­i­ty and fur­ther, that:

(b) The Au­thor­i­ty re­quires CWC to have a lim­it­ed right of in­spec­tion of books and records, suf­fi­cient on­ly to al­low a sub­stan­ti­a­tion of div­i­dends owed and to make statu­to­ry fil­ings and de­c­la­ra­tions;

�2 CWC and CWWI to pro­vide their writ­ten un­der­tak­ing that no part of the ac­tions agreed to be un­der­tak­en in this process for ap­proval for change of con­trol for the so-called "sus­pen­sion of rights" shall be deemed now or in the fu­ture, as op­pres­sive, un­fair­ly prej­u­di­cial or un­fair­ly dis­re­gard­ing their in­ter­ests or their rep­re­sen­ta­tives in­ter­ests (fur­ther to the mean­ing of op­pres­sion un­der sec­tion 242 of the Com­pa­nies Act)....

(c) The Ap­pli­cants and CWC must pro­vide to the Au­thor­i­ty in writ­ing the full de­tails of fi­nan­cial in­vest­ment, source of funds, projects and ex­pan­sion plans for the merged en­ti­ty for the first five year pe­ri­od...to the sat­is­fac­tion of and ap­proval by the Au­thor­i­ty pri­or to is­su­ing an ap­proval of the change of con­trol;

(3) The re­quire­ments set out in (i) and (ii) above are to be sub­mit­ted by the Ap­pli­cants and CWC to the sat­is­fac­tion of the Au­thor­i­ty pri­or to its is­su­ing an ap­proval for change of con­trol; and

(4) The com­plete di­vest­ment of CWC's share­hold­ing of 49 per cent in TSTT must be com­plet­ed with­in one year of the date of com­mu­ni­ca­tion of this re­con­sid­ered de­ci­sion.

Com­pa­ny re­sponds

In a state­ment last night, CWC con­firmed re­ceipt of what it de­scribed as the let­ter of ap­proval for the merg­er with Colum­bus In­ter­na­tion­al from TATT.CWC said it "ful­ly recog­nised that our share­hold­ing in TSTT would need to be neu­tralised ei­ther by a blind trust or by dis­pos­al of our shares and it looked to work­ing with NEL to agree a fair process for dis­pos­al. It said it sup­port­ed a dis­pos­al process that per­mits an or­der­ly sale to be con­clud­ed in a pe­ri­od of not more than 18 months.

CWC said that it has am­bi­tious plans for our Flow busi­ness in T&T and in­tends to make in­vest­ments in rolling out high speed broad­band across the coun­try.CWC's main com­peti­tor in the Caribbean, Irish-owned Dig­i­cel said last night that it had no com­ment on TATT's rul­ing.Na­tion­al En­ter­pris­es Ltd (NEL) chair­man Ken­ny Lue Chee Lip said yes­ter­day that the com­pa­ny, which holds the State's 51 per cent stake in TSTT, is pre­pared to work with CWC in craft­ing a di­vest­ment plan for CWC's 49 per cent stake in TSTT.

Asked if NEL would be in­ter­est­ed in ac­quir­ing the 49 per cent stake from CWC, he said: "I do not be­lieve it is in NEL's share­hold­er in­ter­est to own 100 per cent of TSTT." But Com­mu­ni­ca­tion Work­ers Union sec­re­tary gen­er­al Joseph Re­my lashed out at TATT's po­si­tion in re­quir­ing the sale of CWC's 49 per cent stake in TSTT, de­scrib­ing it as "very weak be­cause it has not ad­dressed the fun­da­men­tal is­sue of the im­pli­ca­tions for the telecom­mu­ni­ca­tions sec­tor in T&T of the ac­qui­si­tion of Colum­bus by CWC.

"What TATT's po­si­tion has ef­fec­tive­ly done is clear the way for CWC to ac­quire FLOW and di­rect­ly com­pete against TSTT, since our in­for­ma­tion al­so sug­gests that FLOW will be giv­en the third mo­bile li­cence."