22 February 2006
Government is currently in the process of negotiating a deal to dispose of its 60 per cent shareholding in Maltacom but despite the importance of such a deal the whole process remains shrouded in secrecy.
Maltacom’s complete privatisation represents the most lucrative sale after Mid Med Bank and the part privatisation of MIA. Even though government still owns 20 per cent shareholding in MIA and a 25 per cent stake in BOV, none are expected to rake in the amount of money the Maltacom sale is expected to make.
The telecoms company is a bounty indeed. Any prospective strategic partner will be in the driving seat of a cash-rich company ideally placed to be at the forefront in offering quadruple-play services.
Maltacom represents a precious piece of family silverware and any attempt to dispose of it must be carried out diligently and in the most transparent manner possible.
Private investors who own shares in Maltacom and the general public, who by virtue of government’s shareholding are also an interested party, are entitled to be informed of how things are developing.
This leader understands that certain issues are commercially sensitive and not all information pertaining to the sale can be made public. But constant and regular updates are necessary unless government wants to expose itself to criticism over the method used for the sale when it eventually materialises.
Why has government not disclosed the number of bidders that are currently engaged in discussions with the privatisation unit or for that matter who these bidders are?
What is so commercially sensitive about officially disclosing the number of bidders who have submitted a final offer?
What is the brief given to the evaluation committee set up by the privatisation unit? What will they be evaluating?
In calling for a strategic partner, what strengths will government be looking for in the prospective investor?
These are only a few of the questions that need to be answered. Unfortunately, silence has only led to speculation. The events last week which saw Maltacom shares taking a knock out after the publication of a story in The Malta Independent on Sunday calling for caution, are a cause for concern.
Apart from the fact that the story contained insider information, whoever planted it had an interest to see the shares tumble. And in a secretive scenario, news of the sort can only create havoc among private investors.
Information is of essence. Investors and the public have a right to be kept abreast of developments.
The general public needs to know whether the final price of sale is a fair evaluation of Maltacom’s potential. The fact that government is selling a controlling stake is good reason to ask for a premium above share price. One only hopes that this once-only chance to rake in some good money from a privatisation deal is not thrown away by some sort of agreement which sees government receiving money over a period of years, diluting the potential impact of a hefty sum.
The privatisation of HSBC is still fresh in the psyche of small investors and the public at large. It was important for government to privatise Mid Med Bank but the method adopted and the price requested, were very questionable. While the one-on-one negotiation strategy adopted in the HSBC sale has been discarded, government needs to come clean on its negotiating ability to obtain a good price.
Maltacom needs to have a strategic partner to help it develop into a more competitive company at the cutting edge of technology. But Maltacom with its weighty position in the telecoms market also has a serious bearing on the national economy. It is for this reason that the strategic partner that needs to be chosen has to be in a position to develop those aspects that not only benefit the company but also the country at large.
While mobile telephony seems to be a lucrative operation, which still has some potential development ahead of it, the country urgently requires more investment in broadband technology that makes it cheap for businesses and customers to hook up. A potential strategic partner needs to have the necessary technical background and know-how in this field as well.
A good deal is not only one that has a good price tag attached to it, but one that can help this country develop further its potential as the ideal information communications centre in the Mediterranean.