Cabinet gave the go-ahead for the divestment of government’s 60 per cent shareholding in Maltacom plc to Dubai-based Tecom Investments for Lm94.5 million, that is at Lm1.55 per share, Monday.
The announcement made by Investments Minister Austin Gatt came after months of negotiations with bidders for the state telecommunications company that includes mobile telephony subsidiary Go mobile.
The agreement, which will be tabled in Parliament by Monday, binds Tecom until January 2009 with retaining the company on the Malta Stock Exchange and bars it from going ahead with any forced redundancies.
Tecom is also bound to invest Lm30 million over the next three years, introduce 3G technology, IPTV, digital terrestrial television, video on demand, next generation networks and increase connectivity bandwidth.
“Tecom is making a clear commitment as a strategic partner so that Malta remains an ICT hub,” Gatt said, who added that the other shortlisted bidder, Ararco, was only interested in financial investment while government was searching for a strategic partner in view of the company’s national importance.
The sale came in for some heavy criticism yesterday by Alternattiva Demokratika chairperson Harry Vassallo, who accused government of “throwing away” Lm25 million. The Green Party chairperson said it was “baffling that cabinet chose to sell a controlling stake in Malta’s primary telecom player at a discount of 20 per cent on the last traded stock market price.”
Reiterating its stand in favour of the telecoms company’s full privatisation, the Green Party said the sale was being concluded in the “shortest possible span of time with minimal transparency” and “is another bad mark on the already bad record of privatisation processes carried out by successive Nationalist governments.”
The Green Party’s comments were described as “amateurish” in a press statement issued by the Investments Ministry. The statement said that the value of shares was certified by an international company as reflecting Maltacom’s fundamentals and was not based on the speculative price quoted on the stock exchange.
Steered by the Privatisation Unit with the consultancy of Lehman Brothers, the original sale offer made by Tecom was of EUR213 million – already deemed as a good market price by the foreign consultants. At EUR220 million, or Lm94.5 million, Gatt defended the below market price saying that Maltacom’s share price remained “unresponsive to the company’s fundamentals”. Gatt admitted Tecom were from the start of the negotiations trying to link their Smart City investment with the acquisition of Maltacom – a move he insisted the government resisted immediately.
“They tried making a connection between one (investment) and the other but I told them we were not linking them in any way,” Gatt said.
Last month, Tecom signed an agreement with the Maltese government for the setting up of the Lm110 million Smart City project, signalling its clear intentions to take over the Maltese state telecoms company, Maltacom.
Replying to questions at a press conference following the signing of the agreement, Tecom chairman and CEO Ahmad Bin Byat did not mince his words about the Dubai-based company’s intentions of acquiring Maltacom as part of their strategy in Malta.
“Smart City and Maltacom are just different means but one project,” Bin Byat said. “Smart City needs advanced telecommunications, and it would not be successful without a strategic foundation in IT infrastructure.”
Also in April, Tecom bought 35 per cent of the Tunisian telephone operator, and enlarged further its telecoms empire through a partnership with Interoute.
The official signing off ceremony for the transfer of shares is expected to be held this morning. Maltacom then holds its annual general meeting on Friday when Tecom is expected to appoint its directors.