Bidding for the sale of government’s 60 per cent shareholding in Maltacom comes to a close today with five companies likely to submit their offers, Business Today has learned.
The five bidders that have shown an interest are: Dubai Telecom, a Saudi Arabian businessperson who owns Oger Telecom, Telecom Slovenia, Icelandic investment company Equity House Novator and Cable and Wireless.
Government will then evaluate the bids and possibly commence negotiations with two or three players.
None of the major European telecom companies such as British Telecom, Telecom Italia, Spain’s Telefonica and Deutsche Telekom have expressed an interest in the sale despite earlier speculation that they were the likely strategic partners for Maltacom.
Over the past months these big players have been occupied by investment decisions in larger markets than Malta. Spain’s Telefonica bought into Britain’s O2 while Telecom Italia has invested in North Africa. And with the enlargement of the EU, Deutsche Telekom has set its eyes on the markets in Eastern Europe.
International market conditions have, to some extent, had an impact on the sale of government’s Maltacom shares since the major companies have been occupied with due diligence exercises in larger markets, opting to sideline any interest they may have had in Maltacom.
Of the five companies, the global telecoms player Cable and Wireless is the major contender. C&W is the second largest telecoms network provider after British Telecom in the UK.
Novator is an Icelandic private equity firm that has recently placed a bid for Poland’s telecoms company Netia. It is particularly aggressive in Eastern Europe.
Oger Telecom is a Saudi Arabian based company with investment interests in Romania, Portugal and South Africa where it recently bought into a mobile phone company.
Dubai Telecom, operating in the United Arab Emirates is reputed to be a market leader in the Gulf state.
Telecom Slovenia is Maltacom’s equivalent in the smallest of the Balkan states. A former monopoly holder, Telecom Slovenia has had to diversify its services since 2001 to compete in a liberalised market. In an international context Telecom Slovenia is a relatively small company but with the possibility of being bought out by some other major European telecoms company. If this does occur and given Telecom Slovenia do win the Maltacom bid, the domestic telecoms company may still end up with a large strategic partner coming in through the backdoor.
Government sources talking to Business Today speak of a target income of around Lm100 million (EUR232m) from the sale of government’s 60 per cent shareholding.
However, industry observers describe this amount as being on the low side given Maltacom’s attraction as a cash-rich company and with licences making it an ideal quadruple-play operator.
“The sale of 60 per cent shareholding has the potential of making more money than what government is targeting,” an industry observer tells this newspaper. “Government can attach a hefty premium to the actual share price given Maltacom’s strong balance sheet and the fact that the investor will be a majority shareholder,” observers say.
When Maltacom had sold its 20 per cent stake in Vodafone back in 2003, the company reaped around Lm12 million (EUR30m) from the sale.
Maltacom has a number of attractions. It is a cash-rich company and easily translates its turnover into cash. Debtor days are low and Go Mobile, which commands almost a 50 per cent stake in the mobile market has a strong pre-paid customer base which ensures a steady inflow of cash. As regards Maltacom’s loans, observers point towards the low value of borrowings and the advantageous rates of interest. The financial indicators provide for a very strong balance sheet.
But the company is also ideally placed to be a quadruple-play operator. It will be transforming its fixed line telephony network into a modern IP-based system by June, it has a 3G mobile phone licence, a licence yet unutilised to operate a fixed wireless network and another licence to operate a digital terrestrial TV service, which the company will launch in the months ahead.