shares in Bermuda Digital Communications, reports business journalist Ahmed ElAmin International telecommunications giant Cable & Wireless Plc has taken a further stake in local market companies going head to head in competition with the Bermuda Telephone Co. Ltd. (BTC).

Cable & Wireless has purchased 500,000 shares, or 27 percent, in Bermuda Digital Communications Ltd., the company which is set to go after BTC's cellular telephone market.

Earlier this year Cable & Wireless took between a 30 to 35 percent stake in startup Quantum Communications Ltd. which is going after BTC's lucrative data and voice traffic in Hamilton.

Telecommunications Minister John Barritt said yesterday he is considering the deal due to concern over consolidation in the industry at a time when Government is encouraging competition in the sector to bring down high prices.

"Of course we are concerned,'' he said. "That is why we are looking at it.'' An internal Government memorandum dated October 23, which was leaked to The Royal Gazette, reveals the 500,000 shares will be transferred to Cable & Wireless (CALA Investments) Ltd., a Cayman Islands subsidiary.

In it assistant financial secretary of international business Ifor Hughes recommends that the Bermuda Monetary Authority allow the transfer so Bermuda Digital can begin operations with the fresh injection of cash from Cable & Wireless. Cable & Wireless is making preparations to form a local subsidiary which would be responsible for operations in Bermuda. The Bermuda Digital shares will then be transferred to Cable & Wireless (Bermuda) Ltd. when it is incorporated.

"Although I am aware that negotiations are ongoing between the Telecommunications Department and Cable and Wireless regarding the incorporation of Cable & Wireless (Bermuda) Limited, I believe that to further delay the transfer of shares from the Company (Bermuda Digital) to CALA would be to unduly penalise the Company in its start-up operations,'' Mr. Hughes stated in his memorandum to Finance Minister Grant Gibbons.

Cable & Wireless General Manager John Tibbles said in an interview last week the company would offer 20 percent in the local subsidiary to Bermudian investors. He said the move to form a local company was at Government's request.

Cable & Wireless is also considering whether it should list on the Bermuda Stock Exchange but no decision has been reached yet he said.

Finance Minister Grant Gibbons said the proposed transfer of shares was being considered. Bermuda Digital is set to begin operations in the first quarter next year.

Currently Cable & Wireless is an exempt company which competes with TeleBermuda International Ltd. in providing Bermuda's international telecommunications link to overseas destinations. Bermuda Digital's chairman and chief executive officer Kurt Eve said there were a number of other foreign investors in the company but it was still 60 percent owned by Bermudians as required by law. "The purchase (by Cable & Wireless) gives us a strong joint venture partner with terrific operating experience,'' Mr. Eve said yesterday.

"C&W is one of the top wireless companies in the world.'' He said a joint venture was a precondition for the company to secure its bank debt so it could move forward with its plans for beginning operations.

Cable & Wireless said in a statement yesterday it was not prepared "at this stage'' to comment about its stake in Bermuda Digital.

On another front, Quantum, which is majority owned by the Bermuda Electric Light Co. Ltd., has laid a fibreoptic network in Hamilton and is going after BTC's local data and telephone voice traffic in the city. Plans are for Quantum to begin operations at the end of this year by providing data telecommunications services to businesses and then extend services to other parts of the Island.

Cable & Wireless also wants to provide Internet services to the local market.

However telecommunications minister John Barritt has stated that Government intends to keep international carriers out of competition in the Internet sector for now.

Cable & Wireless had made plans to go after the international business market by providing high speed Internet service. Government last year outlined in a policy paper its intention to open up competition in the previously monopolistic local and international telecommunications market. Government then announced it would allow TeleBermuda to compete in the international sector against Cable & Wireless and Quantum (North Atlantic), and Bermuda Digital to compete in the local sector against BTC.

The position paper also stated Government would deal with cross-ownership in the telecommunications sector on an individual basis at the time of licensing.

Government intends to include as a condition of licence that any change in ownership in control or of purchases of equity of 30 percent or more would require ministerial approval.

PLP shadow minister for telecommunications Walter Lister said while the party supported the opening up of competition it also wanted Cable & Wireless' Bermuda operations to become a local company.

"Bermuda is such a small market we do not want a mega company knocking out the competition,'' he said. "But on the other hand they should not allow the purchase until Cable & Wireless becomes a local company with first responsibility to Bermuda.'' Grant Gibbons