Tecom wins bid

The government is to embark on negotiations over the sale of its 60 per cent stake in Maltacom with Tecom Investments, the Dubai-based company behind the SmartCity@Malta project.

The Cabinet yesterday approved Tecom as the preferred bidder after it was awarded a "significantly higher score" overall than the competing company, Ararco from Saudi Arabia, by the adjudication committee appointed by the government.

Investments Minister Austin Gatt said in Parliament yesterday that the government hoped to conclude the negotiations by the end of this month. When the process is complete, the documentation will be submitted to the Parliament's Public Accounts Committee.

Tecom's €214 million bid was the higher financial offer of the two and described by the government's financial advisors, Lehman Brothers Europe, as "consistent with the current market valuation for Telecom incumbents".

Government sources said that the financial proposal was "very close to international benchmarks" and reflected the bidders' position on Maltacom's 1,500 or so employees. The government has insisted throughout that the workers form a very important part of the deal.

Although the financial offer is the most significant criterion in the sale of Maltacom according to the sources, the bidders' strategic and commercial aspirations as well as their technical ability were also weighty factors in the selection process.

A measure of job security forms part of the strategic aspect as does the bidder's ability to invest and develop the services arm of Maltacom. The finer details of this vision will be discussed as the final agreement is hammered out.

But the sources said: "The government made it clear from the outset that it wanted a strategic partner."

Tecom's reputation in the telecoms industry has grown rapidly in recent years. It has obtained the second telecoms licence in Dubai and controls the clusters at Dubai Internet City and Dubai Media City - the model for Smart City. Last week, it also made a successful bid of €1.89 billion for a 35-percent stake in Tunisia's public phone operator, Tunisie Telecom.

On the other hand, Ararco is not a telecoms company though it engaged the expertise of Telecom Italia for its Maltacom bid and has not been ruled out by the adjudication committee.

Should talks break down with Tecom, the government will seek to open negotiations with the Saudi company.

"Both bids are acceptable to the government," the sources said, though they denied that there was any relationship between Tecom's Lm110 million investment in Smart City and the purchase of the government's stake in Maltacom.

"There was no leverage whatsoever," the sources said, stressing that the strategic and technical capabilities of each bidder were assessed independently of one another by two leading international companies.

However, Maltacom is expected to play a central role in Smart City and the sources said: "One cannot ignore the visionary component of it all."

The Maltacom privatisation process started in July, 2004, when the Privatisation Unit appointed Lehman Brothers to act as the financial advisors.

One year later an international call for non-binding offers was issued and last October, the government received five non-binding offers.

Two final binding offers, from Tecom and Ararco, were received in the final stage of the bidding process on January 16.