The upcoming sale of Malta’s telecommunications operator GO to Tunisia’s national telecom company is under scrutiny in both countries due to potential conflicts of interest.
Telecom industry sources told this newspaper that both the Maltese and the Tunisian regulatory authorities were having another look at the deal in view of the fact that GO’s majority shareholder, Dubai’s Emirates International Telecommunications (EIT), was also the sole minority private shareholder in Tunisie Telecom (TT), making the venture seem “odd”.
“Despite having other options on the table, the majority shareholder in GO decided to sell its stake to another company in which it has a direct interest and a substantial stake.
“The deal smells odd, especially since EIT is well aware of the serious problems facing Tunisie Telecoms and has been trying to sell its stake unsuccessfully since 2013,” an operator in the industry said.
EIT denied any conflicts of interest and declared that despite the fact that GO’s chairman, Deepak Padmanabhan, also sat on TT’s board of directors, he had not participated in the decisions leading to the forthcoming deal.
“From the very beginning, when TT started considering the possibility of making a bid for GO’s entire issued share capital, EIT, in line with its obligations under Tunisian law, abstained from participating and voting in all TT board and shareholder meetings on all matters concerning the project,” a spokesman for EIT told.
“The sale process, which was followed by GO, was a totally open and transparent public auction process and GO published regular company announcements throughout.”
A TT spokesman said the acquisition of GO would give TT a wider presence in the Mediterranean market and provide a number of benefits and attractive synergies to both TT and GO.
Asked about the company’s current book value, the spokesman said TT was “in a healthy financial situation” although he would not give the latest financial results.
“TT cannot announce its profit for 2015 and 2016 since it is not a public or listed company”, the spokesman said.
EIT holds 60 per cent of GO and 35 per cent of TT. Under the deal announced last month, EIT said it intended to sell all its stakes in GO to TT for about €174 million.
The sale also involves about 8,000 other ‘small’ shareholders, mostly Maltese, who have been offered to sell their shares to TT for €2.87 per share.
The total deal is expected to cost TT about €300 million.
Bahrain’s Batelco, which already has a diversified international portfolio (present in 14 countries) and a much stronger balance sheet than TT, had also made a bid to buy GO. However, on May 24, it announced talks had ceased.
Telecom industry sources are questioning the strategic reasoning and financials behind GO’s and TT’s decision, pointing out that the Tunisian company has been in trouble for the past years.
“In Tunisia, the deal is being classified as a manoeuvre by EIT to monetise its stake in TT,” Tunisian telecom sources said.
“TT is in no position to make such investments and the only international presence it has is in Mauritania. It’s also in a bad financial shape and will have to get a substantial loan to finance the deal,” the sources added.
According to the latest accounts, TT made a loss of €33 million in its last financial year. Also, the company, in which the Tunisian government is the majority shareholder, has been experiencing waves of strikes and social unrest due to opposition to plans by the government to reduce the company’s bloated workforce.
Back in 2013, EIT had announced it intended to sell its stake in TT. However, no significant offers were received.
After the uprising that toppled president Zine El Abidine Ben Ali in 2011, EIT had complained to the Tunisian government about strike action and workers’ demands for higher pay. Yet, no reforms were made.
TT had then announced it cancelled plans to list on the Tunis and Paris stock exchanges after consultations with trade unions.
Asked to state whether EIT still intended to sell its stake in TT, a spokesman said its shareholding in Tunisia was still for sale.
The Malta Communications Authority confirmed it had still not given the green light to the deal and that “the matter is currently in progress”.
Questions sent to the Malta Financial Services Authority were not answered at the time of writing.
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