PHILIPSBURG, WILLEMSTAD – St. Maarten must make its decision on the sale of United Telecommunications Services (UTS) soon and sell its minority shares at the same time as Curaçao, or risk having its shares diluted.
Curaçao, which holds 87.5 per cent of UTS’ shares, is in the final stages of selling. St. Maarten is a 12.5-per-cent shareholder. “Curaçao does not need the consent of St. Maarten shareholders (to sell) and is currently in a position of selling in a very short time frame. Time is of the essence and it is very important that St. Maarten sells together with Curaçao to prevent that St. Maarten stays behind as a minority shareholder and have the risk of being diluted,”
Shareholder representative for St. Maarten, Minister Cornelius de Weever told Members of Parliament (MPs) during a meeting on Wednesday, in which he provided an update on the pending sale of the telecoms company, “If St. Maarten does not sell now, there is a serious risk of dissolution of its share,” he added, noting that, while there is no specific timeline, he understands the sensitivity of making a decision in a timely manner.
MPs were told that the process started with a motion in Curaçao to look for a strategic partner, however, during this process it became apparent that parties were not interested in strategic partnership, but were interested in acquiring the shares of the company. De Weever said negotiations with Curaçao are in the “final stages” and a transaction is imminent on part of Curaçao.”
The intention is for UTS to be sold in its entirety with the exception of subsidiaries Antilliaanse Televisie Maatschappij (Tele Curaçao), Data Planet, UTS St Kitts and UTS Suriname. Tele Curaçao and Data Planet will be divested as soon as possible and UST
St. Kitts and Suriname are being liquidated. UTS actively operates in Curaçao, St. Maarten, St. Martin, Bonaire, Saba, Statia and St. Barths. Only the Curaçao and St. Maarten operations are profitable. Curaçao contributes 78 per cent of the company’s overall revenues, St. Maarten 20 per cent; Bonaire 1 per cent; St. Martin, St Barths, Saba and Statia less than 1 per cent.
Certain information was not provided to MPs due to a non-disclosure agreement and/or risk of jeopardizing the sale, during the public part of the meeting, which ended in a closed-door session. Not provided were the name of the buyer and the proposed sale price of UTS. Several media houses in Curaçao have, however, reported that the company was being sold to Liberty Latin America, which is part of telecoms giant Liberty Global. Liberty Latin America owns Cable and Wireless with Columbus/Flow and operates in a number of countries in the region.
In explaining the process leading up to the pending sale, UTS’ Corporate Manager of Legal and Regulatory Affairs, Rauf Engels, said in June 2017, UTS began to look for an international advisor to assist it in the process of finding a strategic partner. Due diligence and an internal evaluation were done to determine the value of the company. A “teaser” was sent out to gauge interest in the company and this resulted in between 30 and 35 companies that could have been a partner of UTS. Two candidates subsequently presented a non-binding offer to UTS and these were given to the shareholders to take over the process. Curaçao later installed a privatization committee to negotiate with the potential buyers.
A similar committee was later installed in St. Maarten comprising Curtis Haynes, Peggy-Ann Brandon, Jude Houston and Lieuwe Hiemstra. Haynes told MPs that St. Maarten entered the process at a later stage. The St. Maarten committee examined the process conducted by Curaçao to determine whether the preparatory work was done correctly, whether it was reliable and whether all necessary issues had been addressed. The committee concluded that the process was handled correctly.
De Weever said the UTS shareholder in Curaçao does not have to follow the same process as St. Maarten to proceed with the sale. While St. Maarten needs a “landsverordening” to sell, Curaçao does not. De Weever stressed that the share value continues to decrease “so it is important to sell a soon as possible, especially now that there is an interested buyer.”
UTS St. Maarten official Glen Carty told MPs that revenues in the company have been dropping over the years due to a number of factors, including the economy in the main market, technological developments and the disappearance of “voice.”
He said in 1991/1992 there was an opportunity given to the then Landsradio and Antelecom group to sell and the value of the company at that time had been estimated to be around NAf. 900 million guilders. The sale did not take place then and over the years revenues of the company kept dropping, while expenses continued to climb. In 2017/ 2018, the company as a whole was estimated to be valued at between NAf. 300 to NAf. 400 million guilders and the value continued to drop.
He said also that if UTS is not sold, high investments would be needed to keep up with technological giants. “We are talking about an investment of 349 million guilders for Curaçao, of which 107 million guilders St Maarten (would have to invest),” Carty noted.
While there are no technological giants in Dutch St. Maarten, there are two giant competitors in Curaçao and several in French St. Martin. “Since the main market is in Curaçao – if you look at it – the economy is fragile and it continues to become more fragile. People do not have money to charge their phones, no money to top up and no money to buy the services, and revenues continue to drop,” Carty explained. “In St. Maarten, we have our challenges too. We are still rebuilding after a very powerful hurricane and we have some challenges in our economy also.”
He said competition amongst “giants” is “unfair” because while UTS is proud to purchase 1,000 phones, for example, giant competitors buy four, 40-foot containers and benefit from a much cheaper price. “We are just a small company though we have Curaçao, St. Maarten, Saba, Statia, French side and St Barths…. We have a choice to make – we have to go left or right. If we go left, could we end up in the cemetery? Could it be the end of UTS in the next few years because our value continues to drop and prices continue to rise? … In the business of telecoms there is really nothing more that we will be able to do.”
Continuing with the sale will bring “fresh capital” into the country and while it is up to the shareholder to determine what the funds can be used for, Carty suggested that it can fund special projects such as perhaps Phillipsburg Jubilee Library and transforming this into a technological centre, or to bring technology to school and furnish the economy.
As it relates to UTS staffers, said De Weever, the “strategic partner” would acquire the shares of UTS in the process and this will be accompanied with all obligations to personnel. He said also that the ‘strategic partner” would be required to adhere to local rules and regulations. Also, in the Sales and Purchase agreement, there will be no material layoffs for two years. The “strategic partner” did not express anything about reducing the workforce.
As it relates to TelEm, the minister said the Council of Ministers is aware that the sale will have an effect on this company and an impact study has to be done to determine the short-, medium- and long-term consequences of this. Discussions have been ongoing since 2009, for TelEm to be a strategic partner of UTS, but nothing materialized from these talks. The Council of Ministers had received a proposal from the managing board of TelEm, but the content of that proposal could not be ascertained. UTS Eastern Caribbean operations has 58 employees.