The Dubai-based company Tecom Investments is to buy the government’s 60 per cent stake in Maltacom for e220 million (Lm95 million).
The purchase price is e7 million more than the offer originally made when negotiations started, said Investments, Industry and IT Minister Austin Gatt yesterday.
Dr Gatt said the agreement between the government and Tecom will be signed tomorrow.
The privatisation policy adopted by the government was, he said, the right one in the context of today’s globalised scenario.
The government, said Dr Gatt, should not be involved in those sectors where the private sector is better positioned to give added value. He said the government believed in the private sector and that, in the majority of cases, those companies that had been privatised had grown and become successful. This, said Dr Gatt, was proof that the government’s strategy was correct.
The telecommunications sector was particularly vulnerable to competition, he said, and this would increase locally in the light of the recent announcement that Melita Cable would be entering the fixed line market and a third player is shortly entering the mobile market. He outlined the privatisation process which began in March 2004 with the announcement by the Privatisation Unit and the appointment of Lehmann Brothers as the government’s advisors in July 2004.
Tecom Investments was eventually chosen as the preferred bidder for the government’s 60 per cent stake in March 2006. The rest of the shares are owned by private investors.
Dr Gatt said that, bar any unforeseen developments, he would be tabling the agreement in Parliament tomorrow for scrutiny by the Public Accounts Committee.
He explained that the government had chosen Dubai-based Tecom Investments because the company had promised a strategic partnership and not just a financial investment. Tecom’s substantial shareholding in Interoute, the world’s largest fibre-optic cable network and its shareholding in Tunisia Telecom, would leave Maltacom ideally positioned to grasp the opportunities that lie ahead, he said.
Tecom has also entered into a firm commitment with the government on a strategic plan for Maltacom that includes an investment of Lm30 million over three years. It is committed to increase the data bandwidth between Malta and Italy, to enter the DDTV market, interactive TV and enhancing its VOIP products and to enter new services such as the Wi-Max and Quadruple Play networks.
Tecom will also continue Maltacom’s Corporate Social Responsibility programmes and has made a commitment to increase the number of these initiatives, Dr Gatt added.
The company has also agreed not to de-list Maltacom shares and not to sell any of its shareholding, or increase it, before 1 January 2009.
It has also given guarantees that it will not enter into any forced redundancies before that date and that it was ready to extend the collective agreement for another year after it expires at the end of 2006.
Other initiatives in the strategy document include the increase of 1,000 Telecare subscribers, the provision of free services for 600 disabled people and investments of Lm200,000 each in entrepreneurship programmes and MCAST programmes.
Tecom will also be offering 50 summer job placements every year.
Dr Gatt confirmed that the final sale price paid by Tecom is e220 million (Lm95 million), an increase of e7 million over the original offer of e213 million.
This results in a value of Lm1.55c4 per share, an increase of 4c4 over the starting offer price of Lm1.51 per share.
In answer to a question, the minister said that the negotiations for the sale of the government’s share in Maltacom had nothing to do with the SmartCity project and two different negotiating teams were working on the respective projects.
All government directors will resign as soon as Tecom takes over the company.
Maltacom’s annual general meeting is due to be held on Friday.