Monrovia – The Liberian Senate has reached a unanimous decision to halt ongoing discussions by Libtelco to purchase cellular company, Novafone.
The Senate’s decision, according to a motion, is to give the committee on Post and Telecommunications, chaired by Senator Nyonblee Karnga-Lawrence of Grand Bassa County the chance to gather the needed information as it relates to discussions surrounding the alleged US$10m purchase of Novafone by Libtelco.
The probe came as a result of a communication written by Maryland County Senator, Dan Morias, who informed plenary that the Senate has been left out of the discussion surrounding the alleged purchase of the cellular company.
Senator Morias’ communication stated: “Moreover, Liberia, being a Republic, practices free market economic principles. It beats our imagination that we will get involved, not in failed government institutions, but rather join the free market of purchasing failed institutions as Novafone GSM and thereby transferring its liability to the people of Liberia.”
He further asked his colleagues to use their oversight responsibility to arrest a situation he described as one near catastrophic proportion. The communication, after a brief discussion on the floor, was sent to the Committee on Post and Telecommunications.
In remarks, Senator Nyonblee Karnga-Lawrence chair of the Senate Committee on Post and Telecommunications asked plenary to include other committees on her committee which include the Senate Committee on Judiciary and Ways means and Finance.
The deal, according to multiple sources, is valued around US$10 million. Novafone will reportedly receive US$5 million up front, with the remaining balance expected to be paid to the company within a year.
But Mr. Sebastian Muah, Managing Director of Libtelco when contacted by FrontPageAfrica said the amount being speculated is wrong.
According to Mr. Muah, the deal is actually valued at around US$10 million with US$7 million being paid to the struggling cellular company up front and the balance US$3 million set to be paid at a later date.
The deal comes just weeks after the acquisition of another local cellular phone company, Cellcom Liberia by Orange Group via its Orange Cote d’Ivoire
FrontPageAfrica has learned that once the deal is sealed, the National Social Security and Welfare Corporation (NASSCORP) will replace Ecobank as guarantor.
The financial valuation of Novafone is unclear, with challenges in determining the current market value based upon future cash flows or its maximum earnings potential.
In the technology industry, companies sell at many multiple of their current earnings, since the market position of the company is important.
But in a moribund economy such as Liberia, with Novafone only having a small share of the market and with negative cash flows, it is troubling to some analysts that the Liberian government would purchase such an asset with guarantees from an SOE without much public debate or understanding.
Henry Karmo (0886522495) [email protected]