Portugal Telecom woes unlikely to affect MTC
Shares in MTC Namibia’s technical partner, Portugal Telecom took a tumble recently to the extent that trading of its shares were suspended on the Lisbon bourse. Recent news reports suggest that a potential merger with Brazilian telecommunications company Oi SA sent Portugal Telecom’s share price tumbling.
Commenting on the matter, MTC Managing Director Miguel Geraldes this week said, “We can safely state that the recent decline of the share price of Portugal Telecom will not affect MTC in any manner or format.” Portugal Telecom holds a 34% stake in MTC as well as a management contract which gives it the right to appoint the managing director.
He added, “We can reassure our customers that the share price of Portugal Telecom will not affect MTC nor its operations. MTC operates independently with its own procedures and policies approved by the shareholders and it is completely funded by its own capital.”
Portugal Telecom has been making the headlines for the wrong reasons in recent past. Shares in Portugal Telecom dipped 10% last week after a Luxembourg court declined an application for credit protection in Rio Forte Investments SA.
Rio Forte defaulted on a loan recently. Portugal Telecom holds 897 million Euros in debt in Rio Forte. In July, ratings agency Fitch downgraded Portugal Telecom’s status to BBB- from BB+ in July this year, citing the default as the prime reason. Portugal Telecom is not out of the woods yet with Fitch having forecasted tough times ahead for the telecommunications firm. According to Fitch, domestic revenues and earnings before interest, taxes, depreciation, and amortization remain under pressure in the back drop of a difficult domestic economy coupled austerity driven weaknesses. EBITDA declined to a single digit figure in 2013 and the erosion continued into 2014, lowering the expectations for associate dividends.
Despite the gloomy outlook, Fitch expects Portugal Telecom to make hay while the sun shines. Portugal Telecom has managed strongly position itself in the fixed line business and has improved its residential fixed revenues, a rare feat amongst its peers. Equal to that, Portugal Telecom has overtaken Portugal’s biggest cable operator to become the largest provider of triple pay services.