paid $577,125 for a 47 percent majority stake in telecommunications company Quantum Communications, according to the company's annual report which is being sent to shareholders.

Quantum, which began operating earlier this year, provides data communications services in Hamilton. The company will being offering local voice service later this year.

Quantum rents capacity on fibre optic cable installed by Belco in its electric underground conduit system at a cost of $2.8 million. Belco also plans on using the cable to provide customer support, automated meter reading and expand its link to substations and other electricity installations.

Belco Holdings, a publicly traded investment holding company, owns operating subsidiaries Bermuda Electric Light Co. Ltd., Bermuda Gas & Utility Co. Ltd., Belco Energy Services Co. Ltd. and Belco Properties Ltd.

Belco buys stake in Quantum As previously reported in The Royal Gazette , the company recorded a profit of $16.3 million for the 1997 financial year ended December 31, an increase of 9.2 percent over the previous year.

The company's annual report stated the company spent $15.7 million on capital projects during 1997, a figure which includes the cost of the fibre optic cable.

By 2000 the company estimates it will spend between $27 to $36 million on a new generating plant. The company has been moving toward compliance with Bermuda's Clean Air Act.

Over the past several years the company has retired seven of its older engines, decommisioned a steam plant, moved to a lower sulphur fuel and installed a 120-foot exhaust stack to reduce emmissions.

The company has started a pilot programme to remove oil to clean up Pembbroke Canal bank. Over the next year the company will be placing an order for two diesel electricity generating units for its new plant.

As the company projects electricity demand increases of 2.4 percent a year over the next ten years, it is also looking at increasing system capacity.

"As our site in Pembroke is further developed, we will be looking for opportunities to place smaller generating sets closer to the customer,'' the annual report states. "It is inevitable that at some point in the future, we will run out of space at our present site, and distributed generation will become a reality.'' The company is considering the current development and research into fuel cells as an option for bringing electricity distribution closer to the customer. Belco estimates placing generation closer to the customer could eventually defer $28 million in transmission costs required over the next 12 years.

Overall Belco Holdings earnings per share were up about nine percent to $3.60 a share. Return on equity rose to 10.2 percent from ten percent in 1996.

Subsidiary Bermuda Electric sales revenue increased 3.7 percent or $4.1 million to $112.3 million in 1997. Belco president and chief executive officer Garry Madeiros attributed the gain to control of costs and improved performance. The company sold 1.3 percent more kilowatt hours in 1997 than 1996. The sales increase was below the company's projections for the year.

Belco's sister company Belco Energy Services continued to record losses during 1997. The company was formed as a consultant to business looking to decrease energy costs.

The subisidiary lost $269,000 compared to $716,000 lost in 1996. However Belco stated recent internal accounts indicate the subsidiary recorded profits over the last three months of 1997. Belco Energy hired a full time general manager in August 1997, reducing reliance on overseas consultants.

"While the business community has been slow to embrace the need to review their aging, electrically inefficient palnt, and take appropriate corrective action, other avenues of fee earning have been identified,'' Belco stated.

"The group has used its engineering and management expertise to help manage and control large projects and will continue to do so in 1998.'' For example Belco Energy has identified $1 million in savings for the King Edward VII Memorial Hospital for its new central utility plant. The company is also installing a new chilled water plant to reduce air-conditioning costs for three Hamilton office buildings. A study is being done on the possibility of developing a similar but much larger concept which would provide chilled water for air-conditioning through an underground pipeline to all buildings in Hamilton.

Wholly-owned subsidiary Bermuda Gas & Utility Co. Ltd. sales net of cost of goods sold increased by about seven percent to $309,677.

As at the end of 1997 company directors held about one percent of the 4.54 million shares in circulation. Company officers held 0.25 percent. The largest shareholders are Murdoch & Co., which held 14 percent, Harcourt & Co., which held about ten percent, and Willson and Co., which held six percent.