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TFL-FINTEL Merger Given Conditional Approval

TFL-FINTEL Merger Given Conditional Approval
August 06
11:58 2018

Telecom Fiji Limited (TFL) is nearing a deal to take over the retail and wholesale operations of Fiji International Telecommunication Limited (FINTEL)

The proposed merger of the two companies has been granted conditional approval by the Fijian Competition and Consumer Commission (FCCC).

This means that once the conditions set out by the competition agency, which has quasi-judicial powers, are met, the merger will go ahead.

FCCC chief executive officer Joel Abraham declined to reveal what the conditions were.

But it is believed they are to do with competition issues and safeguarding consumer interests.

Both companies are subsidiaries of Government-backed Amalgamated Telecom Holdings Group (ATH).

“We did note certain issues and for those things we had put out conditions; whether they are able to meet the conditions remains to be seen,” Mr Abraham said in a phone interview.

“The conditional approval given will give ATH a chance to meet the requirements, as well as undertake the restructure of their overall portfolios.”

According to FINTEL chief executive officer George Samisoni, the merger was supposed to happen last November but did not materialise.

ATH are confident of completing the merger by September this year, Mr Samisoni said in a July interview.

Currently, FINTEL supplies the infrastructure and bandwidth to local and regional telecom carriers.

The merger will allow the two companies to synergise their operations, doing away with the dual infrastructure and streamlining business for its clients.

 

What the FCCC looked at

“Like any other merger, we were looking at what benefits, if any, will this bring to the Fijian economy,” Mr Abraham said.

“We also looked at how the merger will benefit Fijian consumers and whether it will substantially reduce or lessen competition.

“We also looked at the industry as a whole and how the telecom market is organised – It was a lengthy exercise that went on for quite some time.

“The general scheme of things and the financial viability of both FINTEL and TFL were also examined.”

The competition agency also examined how the merger would affect other players in the internet service provider market – like Vodafone and Digicel, Mr Abraham said.

“We think there seems to be adequate competition in those terms,” he said.

 

Consumer benefits

On the consumer front, Mr Abraham expects data prices to decrease once the merger goes through.

An example is TFL’s latest connect Xcite big data internet plan, which offers high-speed internet for as low as $39.

“If you look at all this it shows that there are signs that the Fijian consumer will eventually pay less for using data, which I think is good given that Fiji is quite aggressive with its information communication technology (ICT) ambitions,” he said.

“If there are operation efficiencies that both FINTEL and TFL can get out of this merger, the gains need to be passed on to the consumers and that is where we come in.”

 

Financial results

In ATH’s audited annual report ending March 31, 2018, TFL’s operating revenue stood at $88.6 million, down 1.6 per cent from the previous year.

The report attributed the decrease to “industry trends reflecting a decline in fixed voice revenues.”

However, profit before income tax closed at $22.19m, $1.16m more than the previous financial year, the report said.

The company’s net profit after income tax expenses of $4.27m closed at $17.92m, according to the report, which it said was an increase of $1.44m from the previous financial year.

FINTEL’s financial performance, according to the report, was “positive.”

Its operating profit stood at $7.4m, $0.1m less than in 2017, the report, published on the South Pacific Stock Exchange website, showed.

Profit after tax was at $6.6m, $0.2m less than in 2017.

FINTEL declared a dividend of $5.1m ($5.3m in 2017). An additional $10m was declared as a special dividend, bringing the total amount to $15.1m.

Feedback:  sheldon.chanel@fijisun.com.fj

 

 

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