Govt hunts for MTC cash

front mtcGovernment is looking for an investor with deep pockets, to partner in the buying of Africatel’s 34 percent shareholding in MTC, after the international company gave it a six-month ultimatum to complete the transaction, the Windhoek Observer can reveal.
Africatel had initially planned to transfer its MTC shareholding to Luxemburg firm, Samba Luxco S.a.r.l. (Samba), but the Namibian Government is now exercising its pre-emptive rights to buy the shares, as part of an international dispute resolution agreement between itself and Africatel.
Government, through the Namibia Post and Telecommunication Holdings (NPTH), currently holds a controlling 66 percent stake in the mobile enterprise.
As the Government pushes to fully ‘Namibianise’, the country’s dominant mobile company, funding concerns around the deal have, however, been raised, as the cost of the shares are expected to run into hundreds of millions of dollars - funds which Government does not have at the moment, amid a cash squeeze that has seen it battling to meet its obligations.
Public Enterprises Minister, Leon Jooste, confirmed the latest development when contacted for comment on Thursday.
Jooste said he is confident that Government would meet the set deadline, which expires towards the end of July.
“Ironically, some of the best investment opportunities are often found within these complicated times. Government will not be buying the shares or funding this transaction; it will be a purely commercial transaction and will not require a Government guarantee or any other form of economic intervention,” Jooste said.
“It’s important to understand that this transaction was activated, due to the fact that the majority shareholder in the 34 percent filed for bankruptcy, and this transaction is ultimately part of risk mitigating measures.”
The cash-flush Government Institutions Pension Fund (GIPF), which was last year touted as a likely funder of the deal, has since distanced itself from backing the transaction.
Quizzed if Government will retain its previous arrangement with Portugal Telecom, where a technical partner had management control of MTC, Jooste said it was one of the options on the table for Government.
“MTC is a model of how an appropriate strategic (technical) partner can be to the benefit of a State-owned enterprise (SOE). The current strategy involves various phases, where one of them will include a proposal on various options of attracting a new strategic technical partner.
“A technical partner to an SOE may be in the form of a service provider or an investor taking up equity in the company, but these options will be weighed, and the best one proposed at the right time,” he said.
Jooste also responded to concerns that MTC will be prone to political interference, if Government takes over the management rights, which were previously in the hands of Portugal Telecom.
“The concept of political interference in SOEs is a global phenomenon, and one which has effectively been addressed through governance reforms and new ownership models in many countries.
“The transformation and reform of our Namibian SOEs will equally contain elements to define the boundaries between the State, as the shareholder, and the SOEs,” Jooste said.
Jooste was, however, non-committal when asked whether his ministry, which is tasked with overseeing the operations of SOEs, had begun the process of appointing a substantive Managing Director and Chief Technical Officer, following the exit of Miguel Geraldes and Carlos Malab, respectively, from MTC earlier this month, after the disinvestment by Africatel.
“This will once again form part of the phased approach. In the meantime, we have no reason to question the abilities of the current acting CEO (Thinus Smit) or the rest of the management team, to run the company smoothly.
“The acting CEO, who has been with the company as chief financial officer for many years, together with his colleagues, form a formidable team and they have all the required qualities to lead the company,” Jooste said.
Sources say that Government does not plan to fill the two top positions anytime soon, as it will seek to use them as a sweetener for any potential investor or technical partner in the business.
The developments around the MTC shares come as Prime Minister Saara Kuugongelwa-Amadhila called on investors to snap up shares in the mobile company, at last year’s Invest in Namibia conference.
MTC is the country’s biggest mobile enterprise, with over two million subscribers, followed by another Government-owned entity TN Mobile, with about a 100,000 subscribers.