LIBTELCO Boss Clarifies ‘US$30M’ Acquisition of Novafone

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The Managing Director of the Liberia Telecommunications Corporation (LIBTELCO), Sebastian Muah, has clarified that the price tag on the transaction between Novafone and Libtelco is US$10.4 million, not US$30 million as it has been reported.

Director Muah made the disclosure at the Ministry of Information’s regular Thursday press briefing held on Capitol Hill in Monrovia.

He said, “The acquisition of 100 percent shares in Novafone means Libtelco can do what it needs to foster its commercialization and strategies; and it means Novafone continues to run, but with a new management team and direction.”

Expanding on the benefits of the agreement, Director Muah said with the acquisition of Novafone, Libtelco will also maintain the current license, which costs US$1 million a year or US$15 million for 15 years
He said the value of the remaining cost on the license is about US$12 million.

“Novafone has a competitive asset that will allow Libtelco immediate national coverage and provide immediate competition… the manufacture of the core network of Novafone put the replacement value on its equipment with still 10 years remaining.

“US$11 million depreciated over the last three years would net to about $8-9 million,” Director Muah said.

He said the cost to build over 100 sites for Novafone across the country would cost over US$5 million, including a fully online site without access to network equipment. Libtelco, he said, would spend over 24 months to get access to the network.

“Novafone has active subscribers base between 90,000 in a month and 190,000 in a three month period. These subscribers pay on the average US$3-5 per month. Telecom’s valuation takes into account customers. Despite all the challenges, Novafone’s revenue for the last two years exceeded US$4 million,” the Libtelco boss said.

He said Libtelco saw an opportunity to acquire the network and use Novafone as the vehicle because Libtelco intends to accelerate the revenue growth, which continues to rise year by year.

“Our focus is to increase the operation’s profit margin. Since Novafone was not experiencing losses due to the decline in revenue, it continues to increase in its operational costs. We also saw it as a way to accelerate Libtelco’s market access immediately and not wait for 24 months down the road,” he said.

On the impact on the government and Liberians, who are owners and customers, Director Muah said Libtelco’s license extends to 2030 and its equipment lifespan extends to 2026.

“For the next ten years, provided we do not divest our plan, the government stands to save over 70 percent of its current budgeted telecom cost, which is right now valued at US$5-7.2 million per year. That’s US$50-72 million in 10 years. It also means the government can now boast of having a national infrastructure to provide the kind of service and system that is required to transform Liberia,” he said.

Director Muah said the government will be able to bring online not only emergency systems, but financial systems that would take cash out of people’s hands and make financial transactions traceable.

Meanwhile, he said Libtelco, with stringent measures, will be completing the proverbial fiber ring in July this year from operating revenue, and not subsidies or loans.

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