A stealth jostling for MTC shares have started in earnest, with the local private sector positioning itself with international investors to be front-runners for a piece of the 34 percent shares, worth over a billion dollars, currently in the hands of an European investment group based in Luxembourg.
Government, which owns the remaining majority shares of MTC through Namibia Post and Telecom Holdings, has confirmed to New Era that Cabinet is deliberating on what to do with the 34 percent shareholding in the hands of an international shareholder.
The shares are worth in excess of N$1.13 billion, according to independent evaluation documentation availed to New Era. The valuation documents were prepared in October 2014 by an investment bank for pitches to international investors interested in purchasing Portugal Telecom’s Africatel assets. Portugal Telecom’s shares in MTC were held through Africatel, a subsidiary in which Portugal Telecom held 75 percent, while the rest are with Helios Investors, a private equity fund that is an affiliate of a Luxembourg entity called Samba Luxco.
However, it appears there are complications with the 34 percent shareholding that Portugal Telecom swapped with Samba Luxco in June this year to settle a boardroom squabble. That asset swap turned out to be a major coup for Samba Luxco, because the MTC assets are the cash cow in the entire Africatel portfolio.
The documentation shows that MTC is the crown jewel of Africatel, with revenue streams gushing – at N$2.74 billion or 172 million Euro as of 2013 – compared to the other two investments in the portfolio.
The value of the other two assets in the Africatel portfolio is less attracting. Cabo Verde Telecom shares, in which Africatel holds 40 percent, were worth N$556.6 million and its revenue put at N$1.1 billion or 70 million Euro.
Africatel’s 51 percent in São Tomé’s Companhia Santomense de Telecomunicações was valued at N$48 million and revenues put at N$207 million, or 13 million Euro. The share valuation was based on figures of earnings before interest, taxes, depreciation and amortisation.
The swapping of assets also appears to have thrown the Namibian government off its balance, as it has long been preparing for the disinvestment of Portugal Telecom from MTC, to either acquire the whole or part of the 34 percent shares. Portugal Telecom has been the minority shareholder with the government owning 66 percent through Namibia Post and Telecom Holdings (NPTH).
New Era could not independently confirm whether or not Portugal Telecom, through Africatel, notified Namibia’s communication regulator and the competition commission of its intention to swap its MTC assets with one of its international investor partners, before it did the swap in June this year.
The Communication Regulatory Authority of Namibia (CRAN) told New Era, upon enquiry, that “the transfer of the MTC shares, whether to government or any other entity must be submitted to CRAN for approval.”
Nonetheless, the swap of MTC assets between Portugal Telecom and Samba Luxco appear to have stalled the process which Portugal Telecom, and by extension NPTH, had kick-started with a number of local and international investment groups with regard to the sale of the 34 percent shareholding.
These investors are now displeased with the process, more so because they were tapped on the shoulders when the then cash-strapped Portugal Telecom commissioned an investment bank to float around the valuation documents of Africatel assets, including the MTC shares.
Managing Director of MTC, Miguel Geraldes, who arrived at MTC on the ticket of Portugal Telecom, did not respond to emailed questions. Questions were also sent to NPTH chairperson Ally Angula, who did not respond.
The Minister of Information and Communication Technology, Tjekero Tweya, told New Era that “Cabinet is seized with the matter,” – when asked to elaborate on discussions regarding the MTC shareholding.
Samba Luxco, through its affiliate private equity investment fund, Helios, declined to comment when approached for some answers, with the spokesperson in London, Jessica Jill, saying: “Helios doesn’t comment on potential investments, or whether or not they are considering a particular sector.” Helios and Samba Luxco were asked whether they would consider holding on to their shares, or would prefer to sell if government decided the shares that once belonged to Portugal Telecom must go on an open sale.
The Helios investment fund holds a number of investment assets in Namibia, which it holds directly, including Vivo Energy (formerly Shell), and Crown Agents which has, as the managing partner for the United States President’s Emergency Plan for AIDS Relief (PEPFAR), funded the Supply Chain Management System (SCMS) since 2006, based in Windhoek. They have also worked on the Millennium Challenge Account.
Portugal Telecom’s fight with Samba Luxco, which technically held 25 percent in Africatel through Helios, started when Portugal Telecom’s new Brazilian parent company, Oi, started selling its assets to cover its debt and moved to sell Portugal Telecom assets.
Immediately, Helios investors – chiefly Samba Luxco – notified Oi that it cannot sell Africatel because of a standing shareholder agreement that obliged Oi as majority shareholder to buy out Samba Luxco’s shares at an agreed set price before selling off the entire portfolio to outside investors, and risk the possibility of not making enough profit for all other shareholders in Africatel.
While Samba Luxco took the matter for international arbitration, Oi directors came up with what they considered the best option for a settlement. They gave to Samba Luxco the crown jewel in Africatel, MTC shares, and in return Samba Luxco would cut its Africatel shareholding from 25 percent to 14 percent.