Public Consultation Alert – (Regulatory Authority) Transact Ltd Change of Control

There is a public consultation by the Regulatory Authority concerning the proposed change of control of Transact Ltd. The deadline for submitting is Monday, October 26th.

The essential points seem to be:

  • Transact proposes to shift 100% of its shares within the Digicel Bermuda structure (Telecommunications Bermuda & West Indies Ltd. – TBWI).
  • Digicel is proposing to transfer the ownership of Transact from Wireless Holdings Ltd. to TBWI.
  • There is no sale of any assets or change in beneficial ownership.

This is essentially purely an internal company reorganisation by Digicel. The apparent purpose is to allow Transact to benefit from the 114B license currently held by TBWI. Transact in its current format is 100% owned by non-Bermudians and in order to trade in Bermuda it must have the benefit of a 114B license.

There will be no changes to operations or strategy within Digicel from this move, and Transact will remain ultimately owned and controlled by Denis O’Brien.

The consultation asks 3 questions:

  1. Will this proposed transaction have an effect(s) on competition within Bermuda’s electronic communications sector?
  2. Will this proposed transaction have an effect(s) on the residents of Bermuda with a particular interest in, but not limited to, the provision of electronic communication services in Bermuda?
  3. Will this proposed transaction have an effect on innovation within Bermuda’s electronic communications sector?

Public Consultation Alert – Regulatory Authority 2021-22 Workplan

There is a public consultation out at the moment for the Regulatory Authority of Bermuda’s workplan for 2021-22. The closing date for submitting a response is Wednesday, October 28th.

It provides an overview of what the RA did during their current workplan, and highlights some of their recommendations for fees going ahead.

There’s a lot in the document, however some key points that jumped out to me on a first read are:

  • The proposed budget for 2021-22 is $5,782,250.
  • The budget for their Electronic Communications section gets a 20% cut, to $2,710,925.
  • If I’m reading it right, their Electricity section gets a 13% increased budget to $2,482,000.
  • They appear to be recommending no increases in fees.
  • It notes their intention to ‘undertake significant Electricity and Electronic Communications sector related projects.’
  • It is noted that the RA has a total of 22 authorised positions, of which there are 2 vacancies. However, they note they are not actively recruiting for those positions at the moment.
  • It notes the impact of covid-19 both on the island’s economy but also on changed communication needs. In particular, it states that the RA will invest in some new communications initiatives as a result: (1) Digital Date Analytics to better understand the consumer online experience; and (2) A Consumer Focused Website – basically they will redevelop the RA website.
  • RFPs for solar procurement are in the works, with 2023 cited as date of commissioning.
  • Further retail tariff review to establish a 3-year tariff period to be conducted.
  • The first steps in the next IRP process to be started.
  • The first phase of a wind pre-feasibility study to be commenced.
  • Significant Market Power (SMP) Remedy Implementation to be set up by general determination.
  • Annual market analysis of the electronic communications sector to be conducted.
  • To encourage competition in the electronic communications sector, the RA will conduct its annual Integrated Communication Operating Licensing process.
  • The RA will also conduct its ongoing spectrum assignment licensing process.
  • It notes that the RA board is composed of 5 Commissioners. $396,000 is budgeted for Commissioners pay in 2021-22 (this equals $79,200 per Commissioner).
  • With 20 filled positions, $3,264,000 is budgeted for salaries (it is not clear if this is inclusive of the 2 vacant positions).
  • There is a budget for consulting services of $1,184,000 (split between Electric Communications at $435,000 and Electricity at $749,000).
  • Consulting services for Electric Communications has been reduced by 43% ($328,600) from 2020-21 as they have increased internal capacity.
  • Operating costs for Electric Communications has decreased by 60% ($239,575) from 2020-21 due to reductions in budgets for litigation and mediation.
  • The Commissioners salaries (honoraria) per their share from Electronic Communications is reduced by 27% ($72,000) from 2020-21 (but this is under discussion by the current Commissioners).
  • There is a 194% ($494,000) increase in consulting budget for Electricity for 2021-22 – the reason given is primarily due to projects required to implement the Comprehensive Retail Tariff and the solar procurement process.
  • There is a decrease of 63% ($203,175) for operating costs for Electricity, due to reduced need for litigation and mediation.
  • As with the Commissioners honoraria for Electric Communications, they also see a 27% ($72,000) decrease from their share from Electricity.
  • So, basically, in 2020-21 the Commissioners had a budget of $540,000, or $108,000 per Commissioner. As such, their monthly honoraria is proposed to decrease from $9,000 to $6,000. It should be stressed that the Commissioners are reported to be unhappy with this proposal. However, the Government has insisted that this is non-negotiable.

For more on their budget, if you don’t want to review the primary source, see this article from the RG.