In just a few days, everything has changed – all that we knew about the world of media and telecommunications last week at this time has been reversed: tonight, Channel 5 is criticizing BTL, while KREMANDALA is praising it; SMART is now known to be Ashcroft’s phone company while BTL is the people’s phone company; Ashcroft’s corporate empire is on the retreat while Prime Minister Dean Barrow is riding the crest of a wave of popular support for his unprecedented move. Indeed it has been a week of reckoning and reversal, but there’s no time for misty eyed sentimentalism – the new board at BTL is busy trying to gather itself after mounting a horse running at full stride. And part of that orientation has included the discovery that Ashcroft’s executives bled the phone company of eight million dollars in two days. It happened on Monday and Tuesday of this week.
That disclosure was made by new Chairman of the Board Nestor Vasquez today. He confirmed reports that had been called into our office on Monday and Tuesday – that the ousted BTL Execs – had been making payments and bank transfers at a furious pace after the expropriation was announced on Monday. Even though the legislation was passed into law and the order authorizing the takeover was finalized in record time, when Vasquez and his new board got into the office at the close of business on Tuesday – the ink had long dried on some very big checks. He told us more.
Nestor Vasquez, Chairman – BTL Board of Directors
“I have noticed that the bank account has dropped by something like $8 million in two days. Now besides that, although I don’t have a detailed account of that $8 million, I notice that Allen and Overy was paid. I was told that there was a $3 million paid, we suspect it was for management fees, and so they paid themselves a big portion of that $8 million and they paid it even without the knowledge of management because the $3 million, I have not seen documented evidence what type of expenditure. We are merely guessing that it is for management fees. While the other for Allen and Overy, I’ve seen that, the legal fees, but everything was expeditiously done by them, meaning in those two days.”
Jules Vasquez,
“Are there concerns or are there indications that BTL was not necessarily being run in the best interest, in the optimal interest I should say of shareholders?”
Nestor Vasquez,
“For the profits for the year ending March 2009, the profits dropped from $37 million to $22 million. That is substantial. That is about $15 million. That is made up chiefly of a loss of $8 million in revenue. Why should we lose in revenue when we have spent in advertising, in the region of over a million and a half dollars in advertising and we have been giving lower rates at all times? Why should we be losing, I have to look into that. But for the profit to drop that much, that is definitely is carelessness.
Because we have the entire infrastructure and we have all the advantages. Telemedia has always had good money for its operation. It has all the professional staff, experienced staff, and we have always been the dominant provider. Why should our revenue drop by $8 million and why should the competition be growing faster than Telemedia? Noh, we will look into that. That needs an explanation.”
Beyond competitiveness,
BTL has to untangle the Channel 5 issue – specifically the ownership of this building on Coney Drive which BTL bought last year and Channel 5 is now taking occupation of. BTL’s advertising banners which were ripped down yesterday, give an indication as to the current state of relations. The Chairman says the company’s external auditors have been trying to unravel the mystery of Channel 5’s ownership for some time.
Nestor Vasquez,
“We are having our second board meeting today and among the priority I think we have to deal with is trying to finalize the audited financials figures for the year ending 31st March 2009. They have not signed off on it, simply because the auditor did not receive answers to a couple of things that were material. One definitely was who really owns Channel 5. They could not produce the evidence that Telemedia had the shares in possession of Great Belize Productions. That’s one that they didn’t answer, that the former management didn’t answer.”
Jules Vasquez,
“How closely if at all has the Board or the executive management looked at the issue of the NDFB Building, the fact that Channel 5 is now about to occupy it?”
Nestor Vasquez,
“Okay well I would say that definitely I have seen the seen the evidence that that building was paid for with Telemedia’s money. Now either that money is going to be paid back by them or someone will have to give us back the keys for that building because they will not get away with what Telemedia has paid for Channel 5, whether it was in buying shares or buying the building, they will not get away with anything. We have to recover that money. That’s definite.”
And what about the state of telecommunications generally where BTL had been restricting access generally?
Jules Vasquez,
“A lot of people are looking towards BTL in the hopes of mass market liberalization. A lot of people want Skype authorities over night, deblocked overnight. Has the board taken a position on these extremely tricky and tempestuous issues?”
Nestor Vasquez,
“No, not yet. We’ve only had one meeting, we’re having another one today and we have other items that are of greater priority than that. But I’d like to think that what the Prime Minister has said in the House will come true, that the people will be getting better rates and the industry itself, telecommunications will become more accessible to the people. The new technology, the people will have access to that and I believe that we will prove, the new management will prove that no matter whether competition is allowed tomorrow or very soon or sometime down the road, no one will be able to outdo
BTL.”
Jules Vasquez,
“But isn’t the inconvenience truth of this entire acquisition, the single inconvenient truth, isn’t it that BTL can’t afford to fully liberalize the telecommunication environment because BTL has to be optimally profitable in order to pay back for the acquisition as soon as possible?”
Nestor Vasquez,
“Well the profitability of BTL is important and we will protect that. Although it has slipped tremendously, I can assure you that in the next six to nine months, it will be right up to mark again and in future years it will grow. While we are dropping rates for the benefit of the Belizean people, we will continue to make bigger profits than in the past because we will not be bleeding it as the former owners were because I can tell you in management fees, they paid over $5 million every year. We are going to save that immediately, not this year because they’ve already taken some of their money but there will be no management fees. When we manage it, we will pay our Belizean people who are very professional, very experienced, very competent to do it for a song.
Government has nothing to fair, the management has nothing to fear about competition, okay. It is a matter of timing and whenever it happens, we are ready. We are ready now and in the future we will be ready more so.”
But BTL will have to pay for itself.
Jules Vasquez,
“Its hundreds of millions of dollars in investment you guys are looking for. That’s not going to come from the man down the street, that has to come from big money, it has to come from big business and the concern is that are we just exchanging Ashcroft for some other strategic investor who wants an overbearing influence on the corporate affairs of the country’s most important company?”
Nestor Vasquez,
“Definitely not, this government would never do that and certainly I would never support an idea like that. I am pretty sure, in fact I do recall the Prime Minister saying in his address in the House that the original concept will be used. That is, there will be a limitation for individual institutions or individual persons that they would not be allowed to own more than 25%. That concept remains, that the small shareholder knows that they will get a dividend every year which will be substantial.
No institution would have majority control of that company, not ever and the matter of the special share will be there with government always having two directors on the board and that will be so worded in the articles that no government will ever be able to change it. It will be tightly worded so that that in itself will be a protection for the people of Belize that their government, whoever they elect, will always be there with certain veto powers on that board, that you will not be able to change certain articles and they will include the limitation on shareholdings.”
And how much is BTL worth. Ashcroft’s group says $300 million US – the Chairman says it is no more than half of that.
Jules Vasquez,
“The Hayward Trust has indicated that they believe or that recent valuations show that the value of BTL at US$300 million.”
Nestor Vasquez,
“That is because they have included all the benefits that they would have derived out of the accommodation agreement but that is past. The accommodation agreement is unlawful, it is invalid, it is useless. That will come to naught.”
Jules Vasquez,
“So then what is the value of BTL as you foresee?”
Nestor Vasquez,
“It is in the region of maybe $300 million Belize dollars, about half of what they are saying.”
Jules Vasquez,
“That’s a long ways off, that’s a hundred less.”
Nestor Vasquez,
“That’s a 100% off but I am sure we are nearer than they are by far and we will be able to demonstrate that and the court will decide. The law provides for that and they will have their valuation and we will have experts to provide valuation for us to demonstrate that we are more on target. And we can easily have a guide on that because when Prosser was trying to buy the entire amount it was $105 million US, that’s $200 million Belize. How it could have jumped so far up to $600 million Belize in such a short time.”
The new board held its second meeting today. It is also working on developing a prospectus for the sale of shares and a new Articles of Association. One prospective investor includes, inevitably, the Social Security Board.
