State-owned Namibia Telecom’s proposed takeover of local mobile operator Leo for a nominal price of N$2 (US$0.24) looks likely to go ahead, following the High Court’s rejection of a privatisation condition imposed by the regulator.
High Court judge…
State-owned Namibia Telecom’s proposed takeover of local mobile operator Leo for a nominal price of N$2 (US$0.24) looks likely to go ahead, following the High Court’s rejection of a privatisation condition imposed by the regulator.
High Court judge Shafimana Ueitele ruled that the Communications Regulatory Authority of Namibia (Cran) exceeded its powers when it subjected the deal to the condition, which required that at least 25% of state-owned Telecom Namibia be opened up to private investment, The Namibian newspaper reported. The condition would require an amendment to the Post and Telecommunications Establishment Act.
The Namibian paper quoted Ueitele as saying the proposed takeover should be allowed to proceed, ordering Cran to present any new conditions by 19 October.
Guinea Fowl Investments (GFI), the joint venture between Investec Bank and Nedbank which owns Leo’s parent company Powercom, brought the case to court in August, arguing the condition was “irrational, unreasonable, impossible to comply with and otherwise unlawful”, according to the report. GFI threatened to liquidate loss-making Powercom if the transaction could not be concluded soon.
While Cran argued the Communications Act aims to encourage private investment in the telecoms sector, Ueitele decided that the privatisation condition went too far.
The judge pointed out that Leo’s owners had approached international mobile operators – including MTN, Vodacom, Orange, TN and Bharti – about the sale, but only Telecom Namibia had submitted a bid.
As well as paying the N$2 nominal purchase price, Telecom Namibia has agreed to settle Leo’s N$240m (US$29.2m) debt, and grant the mobile operator’s current owners N$96.5m (US$11.7m) worth of Powercom shares, the report stated.
Telecom Namibia is owned by state holding company Namibia Post and Telecommunication (NPTH), which also has a majority stake in Mobile Telecommunications (MTC), the main mobile carrier in the country ahead of Leo and Switch.
Switch itself is a subsidiary of Telecom Namibia.
