Yesterday, the Ministry for Investments and IT published the text of an evaluation made on 14 March by consultants Lehman Brothers, which, after taking into account multiple valuation methodologies, comparable transaction and company analysis, and also comparing the current share price of Maltacom with the current valuation of other western European incumbent telecom operators, concludes that Maltacom’s valuation is currently at a significant premium to other comparable companies, trading at 8.3x 2005E EBITDA vs a western European average of 6.4x.
Such a premium, the analysis added, is merely a reflection of:
• The high degree of speculation on Maltacom stock in the context of the privatisation process; and
• Limited trading volume in Maltacom stock.
The high recurrent valuation of Maltacom does not reflect, Lehman Brothers said, the fundamental prospects of the company.
Meanwhile, Rothschilds, Maltacom’s advisers in the process, have told the former board that when one compares the multiples of EBITDA to that current in telecom companies in Europe, the price at which the government share was sold is “justified and normal”.
Speaking to The Malta Independent on Sunday, Sonny Portelli, who was reappointed chairman by the new board, said that after he had commented during Wednesday’s signing of the agreement, that this was a good deal, he was approached by Tecom and asked to consider remaining as chairman since Tecom had full confidence in him. He accepted.
Mr Portelli also revealed a little known detail why the Maltacom board resigned as soon as it was appointed at Friday’s AGM. On 21 April, the last day for nominations to be submitted, Mr Portelli was informed by Minister Austin Gatt that the government wanted to reappoint him, Vince Farrugia, Carmel Camilleri, Alfred Rizzo and Chris Said as directors for a further year. After that date, no other nominations could be accepted before the AGM. Having sought legal advice, the board agreed the nominees should stand for election but once the AGM was over they would resign, which they did.
Tecom has now appointed four new directors, two are American, a woman, an Indian and a Frenchman. Mr Portelli was appointed for a full year, until the next AGM.
Friday’s was a very normal AGM, Mr Portelli said, and he replied to all questions asked, provided that he was in a position to reply. As was pointed out by the floor, both the majority and the minority shareholders in Maltacom now at last have the same purpose – to see the company make a profit, since there is no longer the government as shareholder with other intentions in mind.
The sale of the government shareholding to Tecom has its advantages since it offers previously impossible synergies eg in purchasing.
The horizons of Maltacom employees have also been widened with this agreement as local employees can now receive better training and have better opportunities of promotion.
Tecom have a vision, Mr Portelli added. To see this vision, one must visit Dubai where one is struck with the cutting edge in almost everything. Tecom’s aim, as shown in the presentation at the signing, is to make Maltacom a beacon of excellence that is a source of pride for them, same as they did with Emirates in aviation.
“These are all the reasons why I accepted to continue as chairman,” Mr Portelli said. “I am thankful to be here in this time of change.”