URCA Calls for Comments on CBL-SRG Merger

Yesterday, the Bahamas Utilities Regulation & Competition Authority (URCA) issued a call for comments on a proposed merger between Cable Bahamas Limited (CBL) and Systems Resource Group Limited (SRG).  The Notice of Proposed Merger published on the URCA website does not provide any details on this transaction to assist interested parties in preparing submissions in this proceeding, and neither does the press release issued by CBL on Friday.  The Tribune, however, in an article published yesterday, suggested that CBL intends to exercise a $4.2 million purchase option to acquire 100% of the SRG shares.  This information appears to be based on CBL's 2009 audited financial statements, which include a note referring to a "purchase option which, under certain conditions, allows the company to acquire a portion or all of the outstanding shares in a licensed telecommunications operator".  Anthony Butler, Cable Bahamas president and chief executive, is also quoted in the article as saying that SRG will retain its separate operations, functioning as a wholly owned operating subsidiary of CBL.

This transaction will be an important one for the Bahamian telecommunications sector.  It will combine SRG's fixed-line licence with CBL's Internet and cable TV assets, thus giving the new entity a potential "Triple Play" offering.  This will enable the new entity to compete directly with a privatized Bahamas Telecommunications Company in all of the main industry segments.  Clearly, this is good news for Bahamian telecommunications users.

From a legal and regulatory standpoint, this transaction will also be precedent-setting.  It will be the first opportunity for URCA to apply the merger control provisions of the Communications Act, 2009.  In September 2009, URCA published guidelines to assist in the interpretation of these provisions.  This transaction will be an opportunity for URCA to test the effectiveness of these guidelines in the real world.

Comments are due on Friday October 1st.
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Update:  The deadline for comments has been extended to Tuesday October 5th.  See URCA News Release.