Cosy with Maltacom

Christine Apap, chief of corporate services of the Malta Communications Authority, refers (October 24) to two articles that appeared in The Times and The Sunday Times and which laid the blame for Maltacom's inability to compete at the door of the MCA.

The purpose of her letter, she claims, was to set the record straight. In fact, she warps and distorts the record to an unbelievable extent.

In a regulated market, tariffs are not set by dominant operators but by the regulator.

The acquis communautaire required tariff rebalancing to be completed by the end of the year 2000. Not only was this not achieved but this exercise has been put off repeatedly ever since. This exercise should have been carried out by the regulator not by Maltacom.

The failure to rebalance tariffs lies fairly and squarely on the shoulders of the regulator. I hold that the regulator found the question of tariff rebalancing too hot a potato to handle in the circumstances prevailing then and neglected his duties by playing for time.

Ms Apap claims that, in the early part of this year, Maltacom presented a proposal for tariff rebalancing on a take-it-or-leave-it basis. This is incorrect. In view of the regulator's inability to carry out the exercise, Maltacom, at its own expense, commissioned its auditors to present a number of proposals and at least five were sent to the regulator more than a year ago.

The regulator found that this was unacceptable and requested Maltacom to opt for one of them, which Maltacom did. Now the regulator claims, through Ms Apap's letter, that this proposal was submitted on a take-it-or-leave-it basis. This is typical of the regulator.

Ms Apap also states that the company refused to meet to discuss details of its proposal, let alone justify it.

She is correct insofar as refusal to meet the regulator and his officials goes. On a number of occasions Maltacom found that when its officials had discussions with the regulator, they were abused. Maltacom had therefore decided that all communications with the MCA were to be conducted in writing.

This did not meet with the regulator's pleasure. The regulator's office must be the only government office which insists on meetings, not writings. Of course, meetings give rise to more opportunity for changing things than writings do; scripta manet!

Ms Apap's letter does not mention the fact that Maltacom's auditors were authorised to give all the required information to the MCA's officials and, in fact, a number of meetings were held. But this was not enough. What was required was for Maltacom to withdraw its decision and send its officers, cap in hand, to meet MCA officials; incredible how petty one in high office can be.

I understand that since meetings were reintroduced there has been more than one occasion when the regulator agreed to one course of action and then reneged. Of course, I may be wrong, in which case I am sure a correction will be forthcoming.

Ms Apap states that since May of this year, a new chairman at the helm of Maltacom brought about a refreshing change of attitude in the company's dealings with the regulator. This echoes the sentiment of Joe Grioli when it was reported that differences between Vodafone and Maltacom had been settled and an amicable environment thereby created.

Your readers may be interested to learn that early this year agreement had been reached among Maltacom's shareholders that while the company's shares in Vodafone Malta Ltd were worth €38 million at least, the minimum sum which would be accepted would be €35 million. Around the end of February, I received an offer of €30 million, which I promptly refused as inadequate. The regulator was beside himself with anger.

I note from your report on Maltacom's financial performance (August 23) that the agreement reached between Maltacom and Vodafone will see the 20 per cent of the shares being transferred for €30 million, the same figure that I had refused as inadequate and which so angered the regulator.

No wonder both the regulator and Vodafone find the new relationship with Maltacom very cosy. No doubt a substantial part of Vodafone's investment in a new submarine cable to compete with Maltacom will be coming from savings made on the purchase of the shares from Maltacom.

I had intended to refrain from commenting on Maltacom's affairs for a period of six months. However, Ms Apap's letter has broken my resolve. Like any other beast, when goaded, I tend to react.

(The author is former chairman of Maltacom.)