Foreign ownership v ownership by pension fund?

Posted on July 4, 2014  /  0 Comments

Ownership matters. That is why we take special precautions when the incumbent telecom operator is owned by the government. There is a tendency for the government to want to look after its creature, even if it means that the “playing field” is tilted against private competitors by the regulator.

It’s been a long time since the government of Fiji “privatized” the government department that provided fixed telephony services. But the new owner was not a truly private entity, but the Pension Fund. Now the Pension Fund has increased its stake in the largest mobile operator, buying out the foreign investor, Vodafone.

Vodafone sold its 49 per cent stake in Vodafone Fiji to the Fiji National Provident Fund (FNPF) for FJD160 million (£51 million) in cash.

Vodafone’s exit means the mobile operator is now fully locally-owned. The remaining 51 per cent stake in Vodafone Fiji is held by Amalgamated Telecom Holdings (ATH). ATH consolidates and manages the Fiji government’s investment in the telecoms sector
FNPF, which holds a 58 per cent stake in ATH, now has a combined direct and indirect ownership of 79 per cent in the mobile operator.


While nationalists may rejoice, I believe that Fiji has ended up with possibly one of the worst possible outcomes. If the government was running the telecom operators (fixed and mobile) and did a bad job, it is the taxpayers who would suffer. Now it’s the pensioners who will suffer. If the ATH owned companies do badly in financial terms, I can imagine the pressure that the under-resourced regulator will come under.

Much better would be to sell the entire ATH holding to a foreign entity through a transparent auction. Fiji is the largest of the Pacific islands and the economy is doing well. There should be willing buyers.

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