Dhiraagu’s leading shareholder, Cable and Wireless Communications (CWC), has received an offer from a Bahraini company regarding its Monaco & Islands business unit.
This section of the multinational’s portfolio – one of four regional units – consists of Monaco, the Maldives, the Channel Islands, the Isle of Man, the Indian and Atlantic Oceans, and Africa.
The company has released a press statement confirming the approach.
“Cable & Wireless Communications Plc today confirms that it has received an approach from Batelco Group regarding a possible transaction involving its Monaco & Islands business unit,” read the statement.
“At this point, there can be no certainty that the discussions will lead to a transaction,” it added.
CWC took a controlling stake in Dhiraagu, the Maldives’ largest telecommunications company in 2009 when former President Nasheed’s government sold 7 percent of its shares, giving the British-based firm a controlling stake in the company.
Then-opposition parties criticised the sale, arguing that the acquisition of large stakes of domestic companies by foreign investors was bad for the country.
Similar arguments have been levelled against the development of Ibrahim Nasir International Airport (INIA) by Indian company GMR, sparking fears that foreign firms will be deterred from investing in the Maldives.
CWC now controls 52 percent of Dhiraagu’s shares,with the government holding just under 42 percent as of March this year.
Dhiraagu is currently the largest company on the Maldives Stock Exchange (MASEX) by market capitalisation after listing in January this year.
CWC’s 2011/12 financial report showed that it made $586million in pre-tax revenue from it ‘Monaco & Islands’ interests – 83 percent of this pre-tax revenue came from the company’s interests in Monaco, the Maldives and Guernsey.
The report mentioned that, despite strong growth which saw the Maldivian Rufiyya (MVR) revenue increase by 3 percent, the free float of the currency resulted in a 14 percent loss compared with the previous year’s US Dollar (USD) revenue.
The April 2011 decision to allow the MVR to be traded within 20 percent of the pegged rate of MVR12.85 to the USD effectively devalued the currency as the exchange rate rose quickly to MVR15.42 to the USD without moving since.
Praised by the International Monetary Fund (IMF) as “an important move toward restoring external sustainability,” although some local experts described the decision as “high risk” and “unpredictable”.
“CWC has long been seen by analysts as wanting to sell its island assets, as well as its unit in Macau, given its longer term strategy of focusing on its core business in the Caribbean,” said Britain’s Financial Times .
Batelco (Bahrain Telecommunications Company) operates in Jordan, Kuwait, Saudi Arabia, Yemen, Egypt and India, as well as its home market.
The Financial Times reported that the company was seeking to expand its foreign investments after its domestic subscribers and profitability had dipped, citing stiff local competition.
“Bahraini companies have suffered amid political unrest in the Gulf state that led to widespread protests and a security crackdown,” the paper added.
The company’s shares on the Bahrain Bourse have fallen nearly 13 percent so far this quarter.
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