In June the States-owned telecoms firm announced the sale of its Internet of Things business to private-equity firm Perwyn in a sale rumoured to be worth £200 million, and indicated that the government, as shareholder, would receive a share of the proceeds.
Yesterday, during States questions, Deputy Inna Gardiner asked Assistant Minister Lindsay Ash to confirm what proportion the government could expect to receive.
Deputy Ash said that it would be around 28% of the net sale proceeds, which would take into account certain deductions from the overall sale price, later suggesting this would be around £40 million.
He said: ‘For commercial confidentiality reasons I am not able to reveal the gross proceeds of the sale.
‘Members may recall from briefings at the time of the sale that JT are continuing to hold a percentage investment in the IoT business, which we hope will generate further shareholder returns.
‘Following deductions of that investment and transaction costs leaves the net proceeds paid to Jersey Telecoms. Of the net proceeds the amount that will return to the government will be 28%.
‘We will be continuing discussions with the board as to the application of the balance of proceeds as the deal finally moves to a conclusion, including further future returns to the shareholder, and obviously a lot of money that will remain with JT will be invested into the Island’s infrastructure.’
Deputy Gardiner asked how the 28% return was agreed.
‘We had various discussions with JT. It was obviously up to their board as to the special dividend that we receive,’ said Deputy Ash.
He added: ‘They have plans for funds within the business. We obviously wish them to pay us the special dividend and this, after additional negotiations, was agreed to be a satisfactory additional payment to us.
‘In effect, the Island also benefits considerably more than we are getting back due to the fact that they are doing things such as de-risking the network, which would cost tens of millions of pounds, and we will, of course, be looking at 5G [with the sale proceeds].’
Senator Kristina Moore asked how the ‘circa £40 million’ would be allocated and whether it would be put towards the cost of the new hospital, which is currently budgeted at £800 million.
Deputy Ash said the proceeds ‘cannot be arbitrarily taken’ for the Our Hospital project.
He added: ‘As for the individual dividend that has been paid, the allocation will be set out in the forthcoming Government Plan, which is due to be published next week, and you will see where this £40 million is being spent.’