John Barritt for a five year license.

The company was thrown a curve on Wednesday when the Telecommunications Amendment Act 1996 -- designed to open up the Island's telecommunications industry to competition -- was stalled in the Senate.

Still, the Minister can grant a licence under existing legislation, TeleBermuda president Mike Kedar declared yesterday.

Executives from TeleBermuda, as well as the firms in charge of the company's $30 million initial public offering (IPO), were yesterday hoping to meet with the Minister as early as this morning to put pressure on him to issue the final licence under current legislation.

"While we would prefer to have received a licence of an indefinite term under the new legislation, we are prepared to proceed with the equity underwriting and construction of the system with a five-year licence,'' Mr. Kedar said.

Mr. Kedar is also the founder of Call-Net Enterprises, Inc., whose main subsidiary is Sprint Canada, which generates $700 million in revenue yearly.

Despite the setback, TeleBermuda is moving ahead with plans to construct a $51 million Bermuda/US fibre optic cable link and the IPO.

But further delay -- the company had hoped to hold a licence under new legislation a year ago -- could bump Bermuda from AT&T Submarine Systems' manufacturing queue ultimately adding up to three years to the advent of competition in Bermuda, Mr. Kedar said.

Faced with further delays, technology companies wanting to set up in Bermuda will go elsewhere and telecommunications arbitrageurs will locate in Channel Islands or Cayman Islands, he added.

Doulgas Cunningham, CIBC Wood Gundy Securities Inc. managing director, global mergers and acquisitions, estimated competition will lower the Island's long distance rates 15 to 25 percent. And charging for six second intervals will cut an additional 12 to 15 percent.

For every month the telecommunications monopoly continues, Bermuda's phone bill is $1.2 million higher than if two carriers served the market, TeleBermuda said.

The Bermuda Telephone Company Ltd. currently enjoys a domestic monopoly while Cable & Wireless has a stranglehold in international telecommunications.

Mr. Cunningham estimated Cable & Wireless generates annual net income of about $31 million on revenues of about $73 million and an asset base of $20 million.

First Bermuda Securities Ltd. president Jeffrey Conyers said the political "bickering'' must come to an end so business can move ahead.

CIBC Wood Gundy and FBS are lead agents on TeleBermuda's IPO.

TeleBermuda also said the Bermuda Stock Exchange has granted conditional approval for the listing of the company's shares subject to the filing of the final prospectus.

Based on recent information sessions held in Hamilton, local investor interest in TeleBermuda is extremely high.

Overall, TeleBermuda has met with about 130 individuals or organisations interested in taking a stake in the company.

Interest is high in telecommunications companies because they generate a return on book value of about 16 percent, with tax costs, Mr. Cunningham said.

He estimated TeleBermuda's return on book value of 30 percent per year for the first five years.