Wednesday, February 11, 2009

Government limbering up to sell Gibtelecom stake

Panorama, reported earlier in the week, that the Gibraltar Government apparently wants to sell its stake in Gibtelecom, Gibraltar's main telecomms provider.

Gibtelecom was previously wholly owned by the Gibraltar Government. The Government currently holds a 50% stake in the company. The other 50% is owned by Slovakia's Telekom Slovenije, purchased from the American telecoms giant Verizon, when that company pulled out of Gibraltar in 2007.

Speaking about the potential sale of their shareholding, Chief Minister Peter Caruana recently said that "some interest had already resulted from market soundings".

Mr Caruana has explained that the Government wish to sell the stake in order "to remove uncertainty on this issue". What I'd like to know is... what's the issue? Why is the Government so eager to sell?

Well, it appears that the Government feels its involvement in Gibtelecom is in conflict with its role as telecoms regulator. If this is the case, why not make the telecoms regulator independent, as it should be in any case. This would enable the Government to maintain its important stakeholding in Gibtelecom.

The Gibraltar telecoms market is small but, according to Panorama, there are expectations for good growth. Gibtelecom also provides a good rate of return on their investment for the Government, with around £9 million being shared by the two partners last year.

Mr Caruana recently told Gibraltar International, a local finance magazine, that any sale would have to be "at the right price by an organisation that would ensure that investment continues to be made in technology to ensure a good service for business and residents of Gibraltar". He added that a decision is likely to be made this year "to remove uncertainty on this issue".

Personally, I cannot see the problem. Gibtelecom is a major utility and employer in Gibraltar. I'm sure both consumers and employees would prefer for the Government to maintain a major holding in this important organisation. From a security point of view, it is also important. The issue of conflict can and should of course be dealt with. All it would take is, in my humble opinion, for the Government to make the Gibraltar Regulatory Authority, the telecoms regulator, independent, as indeed, to my mind, they always should have been... but of course, always remaining subject to scrutiny and answerable to the Government. This would better serve the community in Gibraltar I think.

Unusually.... the GSLP (Gibraltar Socialist Labour Party) Opposition agree with me! In a statement today they said:

"Quite apart from the fact that given the present economic downturn it is unlikely that this asset will be sold for anywhere near what it could achieve in better financial circumstances, the Opposition believes that this amounts to the GSD selling the family silver.

Moreover in making the sale the Government would lose all control of the telecoms company (which already produces a very healthy annual return for Government) and over the terms and conditions of employment of all those employed therein."
The Opposition considers it is important that the Government should continue to hold a 50 per cent stake in essential utilities which were previously government owned in order to ensure that it can guarantee delivery of the relevant service and the terms and conditions of employment of all those who work in those industries.

Shadow Minister for Telecommunications, Fabian Picardo, concluded:
"We are totally against the sale of the Government's 50% share in Gibtelelcom.

With the Gibraltar economy so heavily reliant on internet gaming and call centre activity it's important that the Government should remain a player in telecommunications both because of the sector's continued profitability and in order to protect the jobs and terms and conditions of those who work in this industry.

This is not a measure that will enjoy cross party support. We remain committed to Government part ownership of the main telecommunications provider on the Rock. I intend to raise this matter in the next question time in Parliament."

Gibraltar Phone Facts

● 23,000 fixed telephone lines
● 98m minutes of calls originated in Gibraltar, nearly two thirds from fixed landlines
● 25m local calls and 5.2m international calls were made in 2007 from landlines, down from the 38m and 7m in the peak 2004 year.
● 3 VoIP providers - Gibtelecom, Easycall and CTS - accounted for 6.8m outgoing international calls, 27% of the total in 2007.
● half of VoIP international calls were to the UK - just over a quarter were to Spain.