• July 18th, 2019
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Competition commission rejects MTC merger

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Front Page News

Staff Reporter Windhoek-The Namibia Competition Commission has rejected the merger bid between state-owned Namibia Post and Telecom Holdings (NPTH) and the Netherlands’ Samba DutchCo B.V., which together own the country’s largest mobile network operator MTC. NPTH wholly owns MTC’s main local competitor TN Mobile, and is a majority shareholder in MTC with 66 percent. The Dutch company, Samba, owns the remaining 34 percent shareholding in MTC. The merger would, by implication, have meant that the two companies would own both MTC and TN Mobile. This, in turn, would essentially lessen competition between the two arch-rivals, potentially resulting in a heavier burden for consumers. The Commission found that the merger would result in Telecom Namibia, a subsidiary of NPTH which operates TN Mobile and MTC, having less competition because of their common ownership. “Common ownership is unlikely to result in NPTH suffering financial losses when competition between Telecom Namibia and MTC, its two wholly-owned subsidiaries, is eliminated,” it said in a ruling seen by New Era. “NPTH is therefore unlikely to have an incentive to push Telecom Namibia and MTC to compete vigorously post-merger.” Government is now asking the public to give comment on whether or not the Ministry of Industrialisation, Trade and SMS Development should uphold the decision by the Commission to reject the merger bid between NPTH and Samba. The decision has now been referred to Industrialisation, Trade and SME Development Minister Immanuel Ngatjizeko, who has now authorised the notice for public comment on whether or not to support the decision by the Commission. Yesterday, the ministry’s permanent secretary Gabriel Sinimbo told New Era that it is too early for the ministry to pronounce itself on the matter, as public opinion must first be garnered before the ministry makes a decision. The public have two weeks to give comment. The government of Namibia owns 66 percent of MTC, via NPTH, while the remaining shares belonged to Portugal Telecom through its former African subsidiary Africatel. However, since July 2016 the shares belong to Samba Luxco, which were minority shareholders in Africatel. The company received the shareholding through an asset swap arrangement. Although the government owns the majority shareholding in MTC, it cannot, according to the shareholder agreement, that was passed on to Samba, appoint the chief executive officer or any other crucial appointments on the executive of MTC. These appointments are for the positions of executives for commercial, operational, information technology, financial and administrative. Further, the owner of the 34 percent also has a say in the business plan and the annual budget of MTC, and crucial board decisions have to receive approval from the minority shareholder. NPTH hoped to bypass this arrangement by either acquiring the shares now held by Samba DutchCo, a subsidiary of Samba Luxco, or through the merger. The shares, believed to be now worth billons of dollars, are also subject to a legal review in Brazil and Portugal, where the former shareholders in the public entities of Oi and Portugal Telecom are based. The interest is because MTC has always been the cash cow 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 the Africatel portfolio, while the Cabo Verde assets were bringing in revenue of 70 million Euro and São Tomé only 13 million Euro in revenue. MTC shares alone were valued at more than half of Africatel’s total value of N$5 billion, at the time. Portugal Telecom had a fight with Samba Luxco, which technically held 25 percent in Africatel through Helios, 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 and risk the possibility of not making enough profit for all other shareholders in Africatel. The transaction between Oi and Portugal Telecom, as well as other business dealings of Oi and its affiliate companies, are now under a legal scrutiny in Brazil, with allegations that have thus far seen the fall of senior political figures, including the former president of Brazil, Dilma Rousseff.
New Era Reporter
2018-01-26 08:54:56 1 years ago

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