Business Bureau Backs BTL-SMART Acquisition, Projects Major Profit Growth

The Belize Business Bureau has come out firmly in support of Belize Telemedia Limited’s proposed acquisition of Speednet Communications Limited, describing the deal as a financially sound decision that could strengthen the telecommunications sector while delivering benefits to shareholders and consumers alike.  In a press release issued late yesterday, the BBB noted that BTL currently operates in a mature market where annual revenues have largely flatlined at around thirty-two million dollars. According to the Bureau, expanding market share through the acquisition represents a logical path toward long-term sustainability and growth.  BBB President Arturo Lizarraga explained that the organization carefully reviewed key financial indicators before arriving at its conclusion.  The Bureau’s analysis projects that profits could rise to as much as fifty million dollars within three years, with net profit margins climbing from under ten percent to more than twenty percent within two years. Financial models also estimate an internal rate of return of approximately twenty-eight percent over a seven-year period, alongside a projected net present value exceeding forty million dollars.  Of particular importance to shareholders, including small investors, the Central Bank, the Social Security Board, and the Government of Belize, the BBB highlighted forecasts showing earnings per share increasing from under thirty cents to more than one dollar within the five-year payback period. The Bureau noted that this growth could translate into significantly higher dividend payouts, an outcome it says is especially meaningful for Social Security contributors and pensioners who rely on dividend income.

Arturo Lizarraga, BBB President: “One of the things that we wanted to look at was the internal rate of return which is 128%. The other one we wanted to look at was the return on equity. We also wanted to look at the earnings per share. This is very important because the earnings per share allows us to gauge if the company is going up or going down. When the Barrow administration made the purchase of $650 million for BTL at that time the earnings per share was headed down. In fact, because of that, because of the excessive amount we paid for it the current dividend that we received from BTL will never be able to pay back the initial investment. What we’re also saying, because of that, the analysis that we’ve done with the consolidation of this sector, that will allow the company to generate sufficient dividends which will pay back the big amount we invested then and the smaller amount we are investing now, meaning for the $650 million plus the $80 million, we will be able to recoup, Social Security will be able to now recoup the investment that they initially made. And therefore pensioners and contributors who have who have needs for whether it’s an accident or sickness and they need to take care of a benefit will be able to get it without having for us to scramble and charge contributors more. And as you know, it’s employers who pay more than employees to Social Security. Our role around that table is to push Social Security to invest all that money that’s parked in the banks so that we could get a higher return.”

While voicing its support for the acquisition, the Belize Business Bureau also acknowledged the need for consumer protections and regulatory safeguards as the process moves forward.  The BBB said worker protections and severance arrangements are factored into the proposed agreement, along with risk-management measures such as arbitration provisions, drawback rights, and a non-compete clause. At the regulatory level, the Bureau emphasized the importance of strengthening the role of the Public Utilities Commission, recommending that it be further empowered to control rates, similar to its oversight of electricity and water services.

Arturo Lizarraga, BBB President: “We are at this juncture where we need to pivot again, because I think you raised it in the show recently that there is a concern. You have a very good service from Smart and you need to protect consumers from the rates not going up because monopolies will raise rates if they’re not an interceding authority. And so we’re asking government to come with us and let us cross out new regulations for the PUC, the Public Utilities Commission, just like they have in water, just like they have in energy electricity, so that then the consumer is protected from an automatic increase in rates. That’s one of the elements that we want but we also want to go to the administration with a fair competition bill, a draft bill, but not one drafted by CARICOM, not a cookie cutter, one size fits all, one that is Belizean made, tailor made for Belizean’s interests, but we need to protect how we handle competition in this country because the state cannot continue to intervene in the market and monopolize all sectors of the market. Yes, they’ve already entered BEL and the utilities were good, fine, fair. If that’s what the country wants, fine. But then at least let us protect the consumers and let whoever, for example, you receive internet from or cable from somebody else, right? But we would want those others 23 players not to be pushed out the market so that you are forced only to deal with one seller or one provider. So we want to have two things, consumer protection and competition, fair competition rules in this game now that we’re at this point in time and it appears that the acquisition will be moving forward.”

The BBB also indicated plans to engage the government on a draft competition bill tailored to Belize’s national interests.  The Belize Business Bureau concluded by urging the public to assess the proposed acquisition without prejudice, arguing that excessive competition in the telecommunications sector has historically eroded profits and limited investment, while a stronger and more stable industry could better position Belize for expansion into cloud technology and modern data infrastructure.  The BBB is reportedly made up of Arturo Lizarraga as its President; Enrique Rosado as the VP, Raymond Cox as Treasurer; Gloria Mesa as Secretary; as well as Fred Ortega, Ernest Perera, Daniel Matus and Lawrence Ellis as directors.