Govt. sells GT&T shares

Apr 06, 2012 News

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Company unaware of sale – CEO

After disclosing to the Guyana Telephone and Telegraph Company (GT&T) at its most recent Annual

General Meeting that the decision to sell the 20 per cent shares it owned was “off the table,” Head of the Presidential Secretariat Dr Roger Luncheon yesterday changed the tune.
Dr Luncheon announced that the government during its most recent Cabinet Meeting, on Wednesday last, decided on a proposal made by a Hong Kong-based company to buy the shares for US$30M.
The money will be paid in two instalments– US$25M upfront and the remaining US$5M to be paid over the course of two years.
Up until the sale, the government was receiving from GT&T, an annual dividend of US$2.5 million. Dividends will more than likely be used to pay the $5M instalment.
The telephone company, according to reports, had noted the statements issued less than two weeks ago by Head of State Donald Ramotar, that no decision was taken as it relates to the sale of the shares.
Ramotar at that time did reiterate that whenever such a sale is made, it “would be in the best interest of the Guyanese people”.
Chief Executive Officer (CEO) of GT&T, Yog Mahadeo yesterday said that he was surprised at the manner in which the sale was handled.
Mahadeo stated that it was only after Dr Luncheon made the announcement and the media attempted to solicit comments from him, that he was made aware that the company’s shares were sold.
Government yesterday declined to disclose who the Chinese buyers were. Head of the Privatisation Unit, Winston Brassington said that as soon as he informs the buyer that his offer has been accepted he would make the announcement.
Mahadeo also said that he found it to be extremely strange that the buyer had not ventured to have any discussions with him, his management team, or the parent company Atlantic Tele-Network (ATN).
It was also pointed out that any inferred due diligence was with Government, not the company.

The GT&T head questioned which business entity or individual would seek to purchase 20 per cent of a company and not sit one day to have a discussion with the CEO or management of that Company.
According to Dr. Luncheon, the decision to sell the company to an “Asian Chinese enterprise” was because of the due diligence that was conducted with the Chinese company and the offer that was made was communicated to GT&T subsequently. Thus the decision was made to sell.
“It would not be the first decision coming from the privatization board that the government accepted. It won’t be the last that the government has rejected, so the decision was made on Wednesday,” Dr Luncheon noted.
Mahadeo said that prior to yesterday, the last pronouncement on the shares was made by Winston Brassington who signaled that the sale was “off of the table.”
The Guyana Government over the past decade received several hundred million dollars in dividends at no additional expenditure.
When asked about the US$2.5M average earnings that the Government received annually from its shares, and what motivated the decision to sell the profitable asset, Dr Luncheon said, “…If you have been a purveyor of the stock market, you would quite accept that you are here today and that you can be gone tomorrow, so the analysis had to take into consideration. The Privatization Unit that brought together the government, trade unions, consumers and private sector, has looked at this matter in a comprehensive way and so advised Cabinet on the decision to sell.”
That decision to sell has come in for tremendous flak, especially in light of the other investments that the government would have made in the telecommunications industry
While the amount of US$30M has been accepted as a ‘fair offer,’ the motivation behind the sale and subsequent loss of annual revenue for the Government has come in for criticism.
Another critical player in the industry has opined that Government is clearly setting itself as a major player in the local telecommunications industry.
The GT&T boss was livid that the administration has taken its LTE technical plans which it has since handed over to one of its associates, “to build an empire.”
Finance Minister, Dr Ashni Singh in his Budget presentation in the House recently alluded to the government establishing its own countrywide network which will essentially compete with the private operator.
Dr Singh drew reference to a 4G network which will require a significant amount of investment in infrastructure and he pointed to the fibre optic cable that the government has commenced installing.
Dr Singh told the House on Friday last that in pursuit of the objectives of universal access to ICT, Government has been following the twin tracks of installing infrastructure that will see high speed delivery of e-Government content along with ensuring that no household will be left without access to that content.
He said that to this end, amounts totalling $2.6B were allocated to install some 580 kilometres of high speed fibre optic network spanning from Lethem to Providence with drop-off sites at Lethem, Annai, Kurupukari, Mabura and Linden, and commencing a high speed fibre optic backhaul network connecting Moleson Creek to Anna Regina, with a data centre at Providence for the development of e-Government with high speed wireless access, using a 4G network.
A total of $3.1B is budgeted to be spent in 2012 for the continuation of these networks, according to Dr Singh.
It is these pronouncements among others, coupled with the installation of the fibre optic cable and the installation of infrastructure to facilitate a 4G network which causes officials in the telecommunications industry to assert that the Government is seeking to establish itself as a major player in the industry.
The move has also been decried as insensitive on the part of the government, which Mahadeo insists is ignoring the investments and development in the sector already being made as a result of private efforts.
Effectively this means that the Government is selling its 20 per cent in GT&T while building its own telecommunication network.
GT&T’s Workers Union had approached the banks with a view to purchasing some of the shares which would have been owned by the company’s workers, but Brassington had refused to have the shares sold independently and notified that it would only be sold en bloc.

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