The Star (Jordan, Middle East)
01-27-2000
WITH THE sale of 40 percent of the Jordan Telecommunications shares
to the France Telecom-led consortium, the government's centerpiece privatization
strategy is set for the high road.
The $508 million-deal, which became imminent last December, involves
the Arab Bank which also acquires a 12 percent stake in the new company.
With the blessing of the government, Minister of Telecommunications
Abdallah Touqan signed the two agreements with president of France Telecom
Michel Bon.
The rest of the JTC shares are to be divided amongst three partners:
The government remains the majority shareholder at 51 percent, the Social
Security Corp (SSC) takes eight percent, and one percent is to be allocated
to a special JTC employee savings fund.
A $102 million agreement was also reached this month between the SSC
and the government to pave way for the former to buy its shares in the
JTC. Earlier reports suggested that the SSC deal will earn the national
treasury $4.2 million in taxes. The two deals making $610 million in profits,
comprises around 50 percent of the JTC's actual value.
Last December, a group of western financial experts valued the assets
of the JTC at $1.2 billion.
Despite the pomp created by the sale, local economists called on the
government to be more practical and realistic in the evaluation process
of the JTC assets.
Meanwhile, the government made sure that rights of the JTC employees
will not be affected. It also assured that none of the JTC workers will
lose his/her job over the latest developments.
Earlier this month the Arab Bank formed a public limited company (PLC)
to run the economic consortium together with the French company.
Unconfirmed reports said that the company will take charge of all the
financial and social details of the JTC employees.
The reports suggested that the public enterprise will help France
Telecom to run its shareholdings of the JTC side- by-side with the government.
However, sources at the Ministry of Telecommunications confirmed that
the deal will give the French company the privilege to monopolize telephone
services by year 2003. The sources also stressed that all services will
be exempted from customs duty during the same period.
Although the deal is seen as a boost for the government to assert its
privatization policy in the Kingdom, many economists believe that the move
is critical to the national interest.
They urged the government to be aware of future problems that may
arise concerning the telecommunications sector in the Kingdom.
Many economists see the appointment of Touqan as the new Minister of
Telecommunications two weeks ago as a wise move by Prime Minister Abdel
Raouf Rawabdeh to put the vital sector in professional hands.
Before his assignment, Touqan served as scientific advisor to His
Majesty King Abdallah. Experts believe that Rawabdeh's choice of Touqan
aims to ensure a more diligent policy of monitoring the telecommunications
sector in the Kingdom.
Touqan was quoted last week as saying that the JTC must preserve its
commitments towards clients and accelerate the implementation of future
plans as designated. He expressed hope that by the end of this year Jordanians
will have new services as provided by the JTC, including the new mobile
telephone and Internet services.
However, economist Munir Hamarneh argued that the selling of JTC
shares may undermine national security. He said that the move by France
Telecom is part of international efforts to monopolize telecommunications
sectors in developing countries.
He expressed fears about attracting foreign strategic partners in the
government's efforts to privatize its public institutions.
"I think that the move will enable the French company to control the
flow of information and news in the Kingdom," Hamarneh told The Star.
Economist Abdallah Al Malki, however, expressed his cautious approval
over the bargain. "I think the selling of JTC shares is the correct step
in the right direction," he said.
He told The Star that the deal is part of the government's three-year
economic reform program, which has been already implemented last year.
Al Malki noted that the agreement with France Telecom came as the
harvest of the government's two-year intensive efforts to find a suitable
strategic partner to take on a partial stake in the JTC.
"I believe that the deal will serve the interests of all parties, both
the public and private sectors in the Kingdom," Al Malki stressed. "The
bargain certainly introduces one truth that the government has overcome
its hesitation to keep going in its implementation of the privatization
policy."
Meanwhile, Hamarneh ruled out suggestions that foreign partners will
help to promote the economic situation in the Kingdom. "I believe that
any strategic partner aims to deal with its institution from its own point
of view, which means that it will not allow anybody to intervene in its
plans and strategies."
He also expressed doubt over the government's assurance that the
rights of employees at the JTC will be protected.
In conclusion, Hamarneh said that "unless the government applies
written assurances from the new holders to preserve the rights of the JTC
employees, the Kingdom will soon witness an increase in unemployment".
However, JTC officials say assurances have been made that for the next
two years at least, jobs will be protected.
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