Airtel merger for JT?

Wednesday 24 June 2015

Airtel and JT are in early talks about a multi-million pound merger that would see the taxpayer keep a 75% share in the new business.

An offer has been made by Airtel’s owner Sunil Bharti Mittal – who has an estimated fortune of $7 billion from running phone services in 20 countries – and who wants to merge the businesses and pump in money to take a 25% stake in the new firm.

Treasury Minister Alan Maclean confirmed that he had met Mr Mittal to discuss the offer in the States yesterday – on the same day that JT published annual reports showing that profits rose 11% to £8.9 million last year.

He said that the JT board was now considering the offer in more detail – and that the States financial watchdog would also look at the proposals, but that ultimately, politicians would get to vote on the final decision.

Senator Maclean said: “I recently met Mr Mittal at his request and I am satisfied that his offer is intended to develop and grow the JT business and build on his long term commitment to Jersey.

“Having considered the offer, the Board of JT has confirmed that it views the offer as worthy of very serious consideration. Its reasoning for such a positive response to the significant challenges relating to scale that it faces in the market; the access to wider sales channels; and the opportunity to properly leverage the significant international capability of the Airtel business and its owners to grow JT and deliver greater value for consumers and Islanders.”

Airtel's offer would see them take 25% of the newly-merged company, plus one share. That level of share holding would mean that the public of Jersey maintain a controlling interest, but that Airtel would have enough votes to block "special resolutions" - major decisions by companies involving things like changing the article of association, changing the company's name, reducing share capital or winding the company up.

JT’s annual report – also out yesterday – revealed that the company, which started to face competition in the landline market for the first time from the start of this month, paid a dividend of £1.6 million back to the States – who own 100% of the shares – and a further £2.4 million in tax.

But it wasn’t a great year for everyone, with Chief Executive Graeme Millar earning £50,000 less than in 2013, with a total salary, bonus and pension package of £268,000.

The accounts showed that half of JT’s income was made from corporate deals overseas through its eKit subsidiary that sells low-cost roaming SIM cards, its growing network of machine-to-machine.