Cabinet this week officially set in motion the process that is likely to bring the ownership of the country’s biggest mobile telecommunication operator into local hands.
On Tuesday this week Cabinet approved that the state-owned Namibia Post and Telecommunication Holdings (NPTH) proceed with the proposed buying strategy of MTC shares.
“Cabinet approved the GNT/NPTH to proceed with the proposed buying strategy of shares, once the terms and conditions set out by the lender, i.e. GIPF and other financial institutions are agreed upon,” said the statement issued by information minister Tjekero Tweya.
Once NPTH finalises the process, local investors, particularly pension funds, are likely to be tapped on the shoulders to bid for the 34 percent stake in MTC, that is currently in the hands of European-based investment funds.
Yesterday finance minister Calle Schlettwein also hinted that GIPF could purchase the shares as an investment, saying: “MTC is a well-managed and profitable company and therefore it is a good investment for GIPF, if they so wish.”
He was however quick to add that government cannot tell the Government Institutions Pension Fund (GIPF) how to spend its money as all investment decisions are made by GIPF trustees.
“We want all investors who sit on contractual savings to invest more in Namibia because currently 60 percent of all contractual savings are still invested outside the country,” said Schlettwein.
However, first government would have to complete the process of buying back the 34 percent from foreign shareholders.
Government is likely to tap GIPF and other commercial lenders for a loan to purchase the shares, analysts predicted this week.
MTC’s 34 percent shares are worth in excess of N$2 billion, according to independent evaluation documentations availed to New Era.
NPTH is currently the government investment arm, holding the 76 percent equity shareholding in MTC.
NPTH was supposed to close shop by next year, however this winding up has been postponed due to these new developments, Schlettwein revealed to the press yesterday.
In the meantime though, government cautions that it, through NPTH, “reserves the right to retain ownership of the full 100 percent of MTC until further approval by Cabinet.”
Cabinet first wants NPTH and MTC “to devise a strategy to safeguard the future operation of MTC by way of acquiring a technical partner, which is not necessarily a shareholder.”
Cabinet has also asked that NPTH obtain confirmation that the Luxembourg-based equity fund, Samba Luxco, is indeed legally allowed to act on behalf of Africatel, before the negations for government to acquire all shares in MTC go any further.
Samba Luxco now holds 34 percent of MTC shares, after it swapped its asset with Portugal Telecom – which owned Africatel – in June this year. The swapping of assets was to settle a boardroom squabble between the two foreign shareholders.
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 price before selling off the entire portfolio to outside and risk the possibility of not making enough profit for all other shareholders in Africatel.
While Samba took the matter for international arbitration, Oi directors came up with what they considered the best option for a settlement. They gave to Samba the crown jewel in Africatel, MTC shares, and in return Samba would cut its Africatel shareholding from 25 percent to 14 percent.
MTC has been the crown jewel of the Africatel portfolio, which had included mobile communication assets in São Tomé and Cape Verde. As of 2013 MTC was contributing 172 million Euro in revenues to Africatel portfolio, while the Cabo Verde assets were bringing in revenue of 70 million Euro and São Tomé only 13 million Euro in revenue.