Special Telecom Section
Guam
Privatization Woes
In October 2002 the five-year-plus, multi-million dollar effort to sell the Guam Telephone Authority came to a screeching halt when only one company submitted a bid by the thrice-extended deadline and was finally declared to be financially unqualified. Most believe the 2002 GTA sale failed because the process had become too cumbersome and because the telecommunications bubble of the late 1990s had burst, leaving most telecom businesses struggling for survival.
Efforts to privatize GTA, the last government-owned telecommunications company in the United States, were put on hold as the administration of Gov. Felix Camacho took office following the November 2002 election. Camacho is a proponent of privatization throughout the government.
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In May, new GTA General Manager Lawrence Perez unveiled an aggressive one-year timetable to rewrite the Request for Proposal and sell the agency. The process began with the release of a “request for information” in May. “We’re not going to just rebid again and have the same result, nobody responds,” says Perez. The request solicited input from interested companies to “let us know what we can change to allow this thing to happen.” The request resulted in responses from 12 interested parties from around the world, the names of which have not been released.
On Aug. 26, Camacho submitted legislation containing GTA’s proposed changes for the RFP to the Guam Legislature.
The Legislature has given the bill low priority. The most objectionable provision of the bill for senators is the removal of the legislative body from the process. Under the bill, legislative evaluation and approval of any privatization agreement would no longer be required.
Proposed changes included: lowering the minimum price to US$130 million from $175 million (The price includes responsibility for GTA’s debt to the federal government’s Rural Utilities Service of about $105 million. Recently, federal legislation authorized the government to forgive Guam debt and this could affect GTA’s attractiveness.)
Speaker Ben Pangelinan is, however, more cautious than most about privatization. In addition to his speakership, he chairs the legislative committee that has oversight of the process. While current GTA employees would undoubtedly be needed by the “new GTA,” Pangelinan is concerned they would end up with sub par wages.
If an RFP gets through the legislature, the market for Guam’s phone provider is far from certain. Though 12 entities expressed interest, the regional and global economies are not stable and, as an industry, telecommunications has yet to recover from the 2001 crash. Senators are not sure what options will present themselves as the process moves forward. “Let’s hit the market and see what comes in,” says freshman Democratic Sen. Rory Respicio.
Local telecom providers are lukewarm about participating in any GTA privatization. “Our interest at this point is low,” says Mark Chamberlin, general manager of GuamCell Communications, “but we won’t let it pass without taking a good look at it.” Most companies are involved in upgrading their own facilities and services.
Camacho favors privatization as a way to get sorely-needed money into government coffers. GTA workers—unlike other government employees in similar situations—favor privatization to ensure GTA’s viability.
While no one opposes GTA privatization in some form, the procedure has proven to be akin to herding cats.
