Tunisie Telecom in €290m deal for GO Plc

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http://maltawinds.com/2016/07/06/tunisie-telecom-e290m-deal-go-plc/

Maltese telecoms giant GO is set for new owners after its shareholders accepted a bid from Tunisie Telecom of €2.87 per share.

The deal will see Tunisie Telecom take at least the 60% holding of current majority shareholder Emirates International Telecommunications, worth €174.5m under the terms of the deal. This values the Maltese telecoms company at a total of €290.8m.

Speaking after the voluntary bid was accepted, Nizar Bouguila, chairman and chief executive of Tunisie Telecom, said the deal represented a good strategic fit with Tunisie Telecom’s existing operations.

“We are delighted to have been selected as the final preferred bidder for the acquisition of the entire share capital of GO,” he said. “We are committed to becoming a long-term partner for GO, supporting continued investments in the Maltese ICT sector as well as in Cyprus through Cablenet. GO is the leading provider of telecommunications services in Malta with a solid operational and financial performance track record.

“We firmly believe in the strong strategic fit between our two companies.  It will provide each of Tunisie Telecom and GO with the opportunity to accelerate our fibre and 4G network developments as well as to expand our data centre and cloud services offerings.  We believe GO will benefit from Tunisie Telecom’s scale, expertise and skillset while Tunisie Telecom will be able to leverage GO’s proven know-how in particular in quadruple-play offering as well as in content aggregation and delivery.

“We look forward to collaborating with GO, its management and employees as the Company continues to execute on its successful strategy.”

Financial power and strong growth

And the ‘solid’ track record Bouguila talks of is clear for all to see.

In its 2015 annual report, GO revealed it had more than 500,000 customer connections, making it Malta’s leading telecoms company.

Over 2015 the company reported revenues of €123.7m, an increase of 1.2% on the previous year while costs fell by 2.8% to €96.3m (2014: €99.1m).

The majority of this revenue, €109.5m, came from the company’s telecommunications business while the remaining €14.2m came from GO’s data services division.

This meant that the company reported a pre-tax profit of €34.2m and operating profit of €27.8m – up 27.9% on the €21.8m reported for 2014.

The company was also strengthened by its acquisition of Cypriot telecoms company Cablenet in early 2016, giving it access to a market twice the size of its home base in Malta, and was further buoyed by the purchase of a stake in ICT specialists Kinetix.

In the report, GO chairman Deepak Padmanabhan said the investments will help ensure the future success of the Group.

“This will have very significant implications, as GO effectively becomes an operator in two European markets,” he said. “Not only is the potential market in Cyprus twice the size of that in Malta, but the future incorporation of Cablenet’s results into GO’s coupled with the increasing value of the initial investment as both Cablenet and the Cypriot economy strengthen, will have a very noticeable, positive impact on GO’s results.

“A further investment with the potential to deliver long term positive growth and contribute further to strengthening the value of GO was the decision to acquire a majority stake in the Maltese ICT company Kinetix. This will definitely strengthen GO’s ability to service the communications and ICT requirements of GO’s business customers.”

The company is also continuing to invest in its infrastructure, with €60m being ploughed into fibre networks and 4G coverage over the coming months and years.

Padmanabhan said: “The large-scale, multi-year, investment programmes in GO’s core telecommunications infrastructure in Malta is proceeding, and are well on track both with the ongoing roll out of fibre connected 4G and Fibre-To-The-Home.

“Though these naturally both require significant capital investment, they will further future-proof a communications infrastructure that is second to none.”

GO chief executive Yiannos Michaelides added that the investment meant that GO was the only telecoms provider in Malta to be able to offer fibre connected 4G to its customers, testament to its strong growth and continued investment in technology.

“The strength of any company should be judged by the results it delivers over a number of years,” he said. “It is therefore very encouraging to note that, not only have we maintained a positive momentum in recent years, but also that, throughout 2015, GO continued to take the necessary decisions to ensure that such a positive performance can be sustained in the foreseeable future.

“The fact that only GO offers fibre connected 4G and fibre Internet directly into customers’ premises gives us a significant point of difference over competing operators. Truly, we are developing an unmatched, and future-proof, communications infrastructure that gives GO a significant, and sustainable, competitive advantage.”

During the year, GO also completed a spin-off of its property arm, Malta Properties Company, which is now quoted separately on the Malta Stock Exchange.

The deal earnt shareholders a net dividend of €33.6m, the highest in the company’s history/

Share price ups and downs

GO was initially put up for sale in October 2015 after its share price peaked at €3.60 in August before dropping back to €3.30 when the intention to sell was announced.

After that the share price dipped below the €3 mark before rising back to €3.60 in May 2016 before the involuntary bid from Tunisie Telecom was first made.