The major shareholder in GO plc may have opted to pull out because the telecoms market is no longer the attractive, big-profit making business it used to be. The company, however, might keep its shares in Malta Properties Company Ltd, after GO announced a spin-off on Wednesday.
The government had sold its 60% in Maltacom (later rebranded to GO) to Emirates International Telecommunications for €220 million in 2006 but GO announced yesterday on the Malta Stock exchange that the Dubai-based company intends to seek to dispose of its (EITML’s) shareholding in the Company in the short term.
On Wednesday GO announced that it would spin-off its real estate company, MPL, and that its shareholders would be given same number of MPL shares as they currently have in GO. A spokesperson said that, before the spin-off actually happens, a record date will be announced. This means that shareholders holding shares by that date will be eligible to receive the MPL shares. EITML said it wants to dispose of its GO shareholding in the short term but it is unclear whether this will be done by the record date, also giving it a 60% share in MPL.
A source explained that EITML invested in GO at a time when the telecoms business was booming and gave back substantial returns. However, Dubai Holdings, of which EITML is a subsidiary, has increasingly shifted away from the telecoms market and into real estate.
It has recently sold off its 30% stake in Interoute, the owner/operator of Europe’s largest network and global cloud services platform. The company, with over 67,000 km of Lit Fibre and 12 data centres, serves start-ups and international enterprises, as well as every major European telecommunications service provider and major operators across the world, global internet giants, governments and universities.
In 2013 it was reported that EITML also wanted to sell of its 35% stake in Tunisia's state-owned Tunisie Telecom and 26% stake in Dubai-based mobile phone retailer Axiom Telecom however the companies are still listed among its shareholdings. Dubai Holding was among a number of state-linked companies trying to recover from a 2009 property crash.
A source said yesterday that the move was not out of the norm on the stock market, especially given the circumstances. “Even investors of other local telecoms companies might be planning to sell off their shareholding. The telecoms sector is probably no longer considered to be a strategic asset to EITML - it has become more of a utility company, with growth slowing down to a steadier pace. The way I see it this is just a financial transaction by the company, seeking to maximize the potential of the current situation.”
The source also said the announcement was not expected to have a real impact on small shareholders, noting that when the government sold its majority shareholding in Maltacom in 2006, minor shareholding actually registered gains.
EITML’s shares are now expected to be offered on the stock market. Unless another big investor comes in to take EITML’s place, the shares could be taken up by minor shareholders, meaning that all of GO’s shareholding would be public.
The local stock market was hardly affected by the news yesterday, which for some reason was announced just before the start of trading. GO shares closed at €3.50, down 8 cents from Wednesday.
When contacted yesterday, financial analyst Jesmond Mizzi said he would not comment as it was still too early to speculate. He did say, however, that the news was “unexpected,” especially after the spin-off news announced the day before.