people of Bermuda after it was revealed yesterday that a mystery bidder could be close to completing a buy-out deal for the failed Quantum Communications.

Renee Webb, Telecommunications minister, said she believed a "tentative agreement'' had been signed by Quantum's major shareholders, BELCO Holdings Ltd and Cable & Wireless (Bermuda) Ltd, and the interested party.

And, as BELCO revealed this week total losses of more than $8 million as a result of its investment in Quantum, Miss Webb said she hoped there would be news on the buy-out of the telephone company during the next few weeks, creating competition for Bermuda Telephone Company (BTC), which currently has the monopoly.

Miss Webb said: "As far as I know, a sale is supposed to be imminent, i.e.

very soon.

"I think they have signed a tentative agreement and, hopefully, something will take place in the next month.

"We have been trying to ensure that Quantum gets sold.

"The Government has been trying to facilitate competition in the telephone market.

"The public wants to have the opportunity to have a choice.

"This is the only area where we do not have any competition and clearly there is room for competition in this area.

"We feel it is healthy.

"It would ensure that the customer gets the best rates possible and that the customer gets a choice.'' She said legislation was now in place to ensure that any new telephone company would be inter-connected to the BTC system to enable customers from both companies to call each other.

And the minister said if and when the sale went ahead, Quantum's licence would have to be transferred, but that would not prove to be a problem.

Yesterday, a BELCO spokeswoman confirmed that discussions with a possible buyer were under way, but refused to be drawn on the identity of the bidder or what stage the talks were at.

She said: "We are in serious negotiations, that is all I can say at this point.

"I don't think it would be appropriate to name who it is.

What they would be doing is buying Quantum as a going concern.

"But there are a number of issues to be worked out still.'' The news of the possible buy-out came as BELCO Holdings announced in its annual report this week the final figure on just how much it lost on Quantum Communications.

The company revealed a loss totalling $8.4 million on the investment in Quantum.

Sale of Quantum imminent And in a letter to shareholders, the company put a portion of the blame for the failure of the new venture on the previous UBP Government for not opening up competition in the telecommunications market fully.

In a frank letter signed by President and Chief Executive Officer Garry Madeiros and Chairman Robert Tucker, the company said it went into the deal looking for high returns in a way to increase revenue.

BELCO Holdings said it lost $8.4 million, which included a provision for loss of $3.5 million in 1999. The loss reduced the company's total net income for 1999 to $15.8 million, down 10.7 percent on the year before.

The shareholder's letter said: "Faced with heavy financial losses at the end of 1998, Holdings along with Quantum's other major shareholder, Cable & Wireless (Bermuda) Ltd, which holds a 35 percent stake, put the company up for sale in June. At year-end no sale had been finalised and Quantum has ceased operations. At the time of writing this report we are in negotiations with two parties.'' The annual report continued: "When we reflect on the factors that prevented Quantum from succeeding, we recognise and understand what went wrong along the way and have learned from the process.

"We entered into a joint venture agreement with a partner with world-class experience and expertise in the telecommunications industry at a time when the Government had publicly committed to creating an open telecommunications marketplace in Bermuda.'' It said based on those factors, as well as initial research which showed attractive returns on this investment, BELCO Holdings saw Quantum as a significant opportunity to increase revenue as well as shareholder value.

The letter added: "In hindsight, we did not fully appreciate the differences in the business cultures of Holdings and C&W at the outset. We also did not appreciate the nuances of the telecommunications industry, nor the pre-existing relationships within that industry and with the Government.

"Additionally, we were working under the premise that the Government did not set the regulations in place, nor did it have the conviction required, to enforce the competitive environment it espoused was required for the Island.'' The chairman and president added that the Quantum deal's failure had not put them off diversification and that it was essential to BELCO to be able to offer affordable services.

Quantum disconnected their few remaining customers from the system after notifying them that operations would cease on December 31, 1999. BELCO Holdings has a 45 percent stake in Quantum, and Cable and Wireless holds another 35 percent.

BELCO had held a number of discussions with potential buyers for Quantum, but none came to fruition, including a bid in the third quarter of last year by a group headed by Alan Simmons.