…GIPF to fund acquisition deal
Namibia Post and Telecom Holdings (NPTH), which is in the process of being disbanded, has received Cabinet approval to spearhead the process of acquiring the 34% foreign-owned shares in Mobile Telecommunications Limited (MTC) and the Government Institutions Pension Fund(GIPF) will fund the deal. Cabinet has, however, denied that it forced GIPF into the deal, saying “the investment will be a good one because MTC is well-managed and profitable”.
Of late, Government has been turning to GIPF for cash injections by tapping into the pension fund’s reserves, which are over N$80 billion. Cabinet decision to give NPTH that mandate came as a surprise to many seeing that last year Government announced that the NPTH, which is the holding company of Telecom Namibia, MTC Namibia and NamPost, would be dismantled.
Although a timeframe was not given, there were expectations that the disbanding process would not take long given the fact that Cabinet sanctioned it. Despite the move, Government allowed NPTH to continue business as usual and allowed it to continue investing and undertaking new agreements until the process to disband is completed.
Indications so far are that the GIPF will fund the deal, which is expected to be in excess of N$2.5 billion. MTC is majority-owned by government, with its 66 percent stake, while Africatel holds the remainder of shares. Minister of Information and Communication Technology Minister Tjekero Tweya announced the move yesterday during a media briefing on the progress being made to buy back the 34% stake in Mobile Telecommunication Limited (MTC) that it sold to Portugal Telecom a decade ago.
According to Tweya, Cabinet has taken note of the progress made regarding buying back 34% foreign owned stake in the mobile giant. “Cabinet took note of the progress made with regard to the buyback of the 34% foreign-owned shares in MTC,” said Tweya.
However, when asked what the value of the 34% stake in MTC that government wants to buy back was, Tweya said government is yet to determine the actual value.
“We are in the business and have all the figures, what will happen is we will take the entire value of MTC, and that is how [we] will determine the value of the 34%,” said Tweya. According a statement released by MTC in 2011, the 34% shares were sold for N$1.34 billion in 2006 by the Namibian government through Namibia Post and Telecommunication Holdings (NPTH). Moreover, Cabinet approved NPTH decision to obtain confirmation of the legal right of Samba to act on behalf of Africatel B.V and also to devise a strategy to safeguard future operations of MTC in the form of acquiring a technical partner.
“Cabinet approved the GNT/NPTH to proceed with the proposed buying strategy of shares, once the terms and conditions set out by the lender, GIPF and other financial institutions are agreed upon. The Government (through NPTH) reserves the right to retain ownership of the full 100% of MTC until further approval by Cabinet,” Tweya said.
“We cannot dictate to GIPF where to invest because they are independent. I am not sure where the notion comes from that Government has its hand in the GIPF kitty,” he said. As for the currency swap arrangement that have taken place between Bank of Namibia and GIPF, which are in the region of N$8.9 billion, Schlettwein said the move was necessary to boost the country’s foreign reserves.
“GIPF has invested pensioners’ money in instruments in South Africa, which are rand-denominated, so in this case, they kept the rand investments in place and BoN [Bank of Namibia] gave them equivalent Namibian dollars and took rand investments on their books. Foreign reserves in rand improved for BoN and GIPF lost nothing, hence it is a win-win situation,” the minister explained.
He added: “Cabinet did not approve the use of GIPF money to buy the MTC shares, we suggested that if NPTH wants to acquire the shares it could be warehoused by GIPF and the GIPF will be compensated to that value.”
The minister said Cabinet will not dictate to GIPF on how it should spend its funds “because it is an independent entity” but added that the country’s economic policy should be centred around decreasing capital outflows.
Schlettwein said 60% of the country’s savings are invested abroad.
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