May 2017 Financial News

TSTT buys Massy Communications

May 03, 2017

Majority state-owned Telecommunications Services of T&T (TSTT) yesterday signed a share purchase agreement (SPA) to buy 100 per cent of the shares of Massy Communications Ltd for $255 million.

The signing of the SPA was announced at a joint news conference at Hyatt Regency Hotel in Port-of-Spain, which representatives of both companies said would capitalise on the synergies, while creating value for stakeholders, the local telecommunications industry and citizens of T&T.

The purchase will allow TSTT to have immediate access to an additional 34,000 homes in Diego Martin, Port-of-Spain, Trincity, Arima and San Fernando, which Massy Communications has already passed with fibre optic technology.

This agreement means that TSTT now has the benefit of being able to incorporate these customers into its network to offer them additional services such as security or bundles of services.

In explaining the agreement, TSTT chairman Emile Elias said the SPA was subject to approval by the Telecommunications Authority of T&T.

Among those who spoke at the news conference were chairman of Massy Communications Fenwick Reid, CEO of TSTT Dr Ronald Walcott and Brian Jahra, CEO of Massy Communications.

“TSTT is very excited about this acquisition because it does afford us tremendous additional access to the fibre optic layout that Massy had done in many areas which TSTT itself has been planning to do, but had not yet done. Therefore we would not have to duplicate that roll out of fibre because of this acquisition,” Elias said.

Closing the acquisition would allow TSTT to save millions of dollars in foreign exchange, Elias said. “We would be saving approximately US$20 million in foreign exchange that may have already been spent to roll out this fibre so we don’t have to do it.”

This move, Elias said will give TSTT access to a significant number of Massy’s customers. S

ince 2006, Massy Communications has been building its telecommunications network and expanding its services that currently offer fibre optic infrastructure deployment which delivers high-speed Internet and television channels to customers.

Elias said TSTT raised $1.9 billion from the local banking system to carry out its five-year strategic plan which included a roll out of fibre in all the areas, which they acquired from Massy.

When TSTT’s fibre customers are added to Massy Communication’s, the combined entity will have the ability to provide fibre to 59,000 houses, Elias said.

This would allow to meet its target of fibre to 200,000 homes within five years, he said.

In 2015, the Massy group made the decision to significantly invest in the expansion of the fibre optic network.

In the five-year plan, Elias said TSTT’s target is to provide 200,000 homes with broadband service.

Questioned if Massy Communications was selling its assets for $255 million and if they were barely coming out with a profit, Elias in response was quick to point out that TSTT bought Massy’s shares and not its assets.

Elias agreed however that the company included its assets.

Reid said: “We have to look first of all when we invested into this business, we know this business is a cash-intensive business and the initial losses you would incur in the business is something you would expect over a period of time.

“In our thinking and looking at where we go with this business, we took an incremental approach.

We realised we needed to expand that significantly, which would have required significantly more assets.

“We felt it was better from a business point of view that we place this business with a partner who already has that amount of investment to put into the business to take it where it needs to go.”

Elias said the Communication Workers Union which represents TSTT employees was not consulted on the SPA.

 

Source:
Shaliza Hassanali
Trinidad Guardian
Wednesday May 3, 2017

http://www.guardian.co.tt/business/2017-05-02/tstt-buys-massy-communications