Report suggests TCC to be privatized

(Photo: PPSDI webpage)

NUKU’ALOFA-April 21: 12:13pm(Nuku’alofa Times): A report produced by the Pacific Private Sector Development Initiative  (PPSDI), titled “PUBLIC ENTERPRISES – OWNERSHIP, DIVESTMENT & PERFORMANCE
IMPROVEMENT”, has shown that some of Tonga’s State-Owned enterprises may be more beneficial to the national economy if these companies are privatized.

Tonga Communications Corporation (TCC) scored high in the report as one such enterprise that should be Privatized.

In the study it was shown that the Privatization of TCC could generate up to USD40 million at an earnings multiple of
11.

It was stated that TCC revenues from core activities have continued to decline as it struggles with competition. The Return Of Equity (ROE) was 11.3% in 2008 but had dropped to 4.27% by 2014.Competition exists and sale of TCC to another industry player (other than Digicel) would intensify competition.

The report continued to say that Telecommunication is high risk and that the government, as the shareholder, adds no value to the company.

In it’s analysis of Divestment Priority, the report stated that there is an existing private sector competitor, which consistently has prime mover advantage. TCC was in constant catch up mode and that Telecommunications requires significant investment and rapid innovation.

The sale of TCC could generate USD40 million and would encourage a new investor thereby enhancing service delivery and competition, improved telecommunications, greater access and potentially lower cost which
would have significant economic benefits.

The report also suggested some changes in the government’s role in the other SOEs such as selling cutting rights for Tonga Forest Products Limited (TFPL) as soon as practical, stating that Tonga Post had no competitive advantage in parcel delivery as well as many other suggestions.

The Pacific Private Sector Development Initiative (PSDI) is a regional technical assistance facility co-financed by the Government of Australia, the Government of New Zealand, and the Asian Development Bank (ADB).






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