Jersey Authorities To Further Examine Effects Of Jersey Telecom Sale

by Jason Gorringe, Tax-News.com, London

12 June 2007

The Jersey Treasury announced last week that, in response to a comment raised by the Economic Affairs Scrutiny sub-panel in its report on the proposals for the sale of Jersey Telecom, more research will be carried out before final recommendations are made to the States for debate in the autumn.

The purpose of this work is to identify what form of ownership of JT is likely to be in the Island ’s best long term interests.

In February of this year, Jersey’s Treasury and Resources Minister, Senator Terry Le Sueur announced plans for the sale of Jersey Telecom.

Senator Le Sueur expressed the belief that the States' ownership of Jersey Telecom was no longer a wise investment for Jersey, and that there would be greater benefit for the Island if the firm was sold.

“Jersey Telecom is a well-run, efficient and attractive company with a good track record which has brought great benefit to Jersey over the years," commented Le Sueur at the time. "However, it...now faces strategic challenges which could be better addressed if it was part of a bigger, independent organisation.”

Le Sueur went on to add that the sale of Jersey Telecom had been considered from "every angle" and that he had consulted widely in reaching his conclusions. This has involved considering what form the sale should take and whether the JT group should be sold as a single organization or broken up.

He proposed that the sale should be a competitive process which is open to all interested parties. This would include telecommunications industry buyers, institutional investors and “alternative” investor groups (including any group representing local investors).

The proposition to sell was based on four key principles which any bidder for Jersey Telecom would need to meet. Any sale must support Jersey’s economy; provide the best possible prospects for the long term growth and development of Jersey Telecom; ensure that the rights of Jersey Telecom’s employees are safeguarded and achieve the best sale price so that the funds can be reinvested by the Treasury on behalf of taxpayers.

It was announced last week that a joint steering group has been established to oversee the new review. The group includes the States chief executive, the Treasurer, Economic Development’s chief officer, JT’s chief executive and Professor David Parker, the telecommunications expert who has been retained to advise the Scrutiny sub-panel. The review is being undertaken by Oxera, economic advisers to the States.

Senator Le Sueur explained on Thursday that:

"The purpose of this work is to provide the States with further analysis which will help inform the debate on the future ownership of Jersey Telecom. It aims to build on the considerable work that has already been undertaken and provide additional analysis. It will respond to a number of issues which have been raised by other interested parties, and particularly, by the Scrutiny panel. The outcome of the review may well result in a revised proposition on the sale of JT being considered by the States in the autumn."

Part of the work will involve consultation with States members, who have been invited to meet representatives from Oxera on 14 June. Oxera’s report, and the recommendations of the steering group, will be published in late July.

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