After months of negotiations, an agreement has finally been signed to sell folded local phone company Quantum Communications to a group of investors led by Bermudian entrepreneur Alan Simmons.

Garry Madeiros, CEO of Quantum majority shareholder Belco Holdings Ltd., confirmed the news to The Royal Gazette yesterday, which could mean Bermuda Telephone Company will have a competitor in the local market by year's end.

Mr. Madeiros declined to name the price agreed on but it is understood to be significantly less than the $15-20 million Belco and the other main shareholder Cable & Wireless have invested in the local start-up, which had a fully fibre optic network.

"We have signed a share option agreement with a company called Atlantis Gateway,'' Mr. Madeiros said. "There will now be a 60-day period for due diligence and we hope the transaction will then close.'' Mr. Madeiros declined to name the main shareholders in Atlantis Gateway but said it was a majority Bermudian-owned company which will likely have overseas investors.

Documents at the Registrar of Companies office reveal a certificate to incorporate was granted to Atlantis Gateway Ltd. on March 3, 1999. Alan Simmons of Paget applied to incorporate the company with the minimum required share capital of $12,000. He is represented by the legal firm of King & Associates.

Mr. Simmons could not be contacted but a source close to the deal said he is a Bermudian who has been living and working in Toronto, Canada, where he founded a number of different companies, including technology-related ventures. His non-Bermudian partners are believed to be an investment banker and various IT professionals.

Both Belco and Cable & Wireless Bermuda confirmed they are not shareholders in Atlantis Gateway.

Mr. Madeiros said the deal constituted "an outright'' sale of Quantum.

"Belco is not that interested in being a shareholder,'' he said. "At this point, we would rather step back.'' Cable & Wireless general manager Eddie Saints said, "We will not have an investment in the new company. We feel Quantum does have a bright future but it is best for us to stand back.'' Mr. Saints conceded Cable & Wireless stands to lose "several million dollars'' over the decision to close Quantum.

Mr. Madeiros added that the deal with Atlantis Gateway depends on the Minister of Telecommmunications transferring the licence held by Quantum to provide local data and phone service to the new company, however, he did not anticipate any problems.

Quantum will also likely operate under a different name if the sale to Atlantis Gateway goes through.

Mr. Madeiros added, "Since we closed down Quantum, we have been instrumental in encouraging the Government to make amendments to the regulations to make it easier for Quantum, or the new operator, to compete... Quantum was never able to get fully operational.'' Mr. Madeiros said there will be some impact from the fate of Quantum on Belco's bottom line, but the utility company is trying to minimize its exposure as much as possible. Despite closing down Quantum, some 30 data customers remain on the books and a skeleton technical staff of two has been retained to service them, he said, adding a few new customers have even been signed after the closure.

Belco along with Cable & Wireless hold 45 percent and 35 percent shares in Quantum respectively.

After a frustrating 18 months, with about 50 customers signed, Quantum announced earlier this year that its shareholders wanted out. Legal wrangling with BTC over the wording of telecommunications legislation and other issues had dragged on throughout the period, effectively holding Quantum back from interconnecting via a key agreement with BTC with the rest of the Island's telephone network (so that Quantum customers could call BTC customers and vice versa).

However, earlier this month, BTC lost an appeal against a Government order to interconnect with Quantum. BTC had unsuccessfully argued the Government order compelled BTC to associate with Quantum and therefore violated its constitutional freedom of association.

GARRY MADEIROS -- `At this point we'd rather step back'