Shareholders do not GO with the flow

"Deal shrouded in controversy" --Ivan Camilleri (writing in the Times of Malta)

The results of Tunisie Télécom's bid to acquire the shareholding of GO plc are in and, perhaps unsurprisingly, it is evident that the minority shareholders are once again not very impressed with the valuation of their shares--Click here for the Time of Malta article--by the prospective buyers. I say 'once again' as this was also the case when a majority shareholding in Maltacom (GO plc's previous legal identity) was sold off by the government of Malta to Dubai’s Emirates International Communications (EIT) who also operate the second telecom player in the UAE under the "Du" brand. At the time the shares were also sold off at a hefty discount to the average price they had commanded on the Malta Stock Exchange over the preceding several months. 

The issue probably is that there was no correlation between the value of the GO plc shares on the Malta Stock Exchange and the offer made by Tunisie Télécom to the minority shareholders. Even so it was a better scenario than when a majority of Maltacom's shares were sold to Dubai's Emirates International Communications (EIT) and the minority shareholders were presented with a fait accompli. What would really help the market is for EIT to better communicate the rationale (if any), over and above the generation of cash for investment elsewhere, of retaining its influence over the Maltese and Mediterranean telecom markets via a Tunisian entity where it is a minority shareholder.

I will proffer a somewhat simplistic but not so improbable reason: if memory serves the shareholding in Tunisie Télécom was acquired by EIT at a much higher cost, relative to average profits--Click here for a relevant 2006 article--and, hence, it makes sense for EIT to assist Tunisie Télécom by any means possible to return to financial health and thus reduce the impact on EIT's balance sheet. And, of course, that would also make for a better valuation should EIT decide to divest altogether and focus on its booming home turf in the Gulf region.