French fund management company Ardian, which has signed an agreement to buy Icelandic telecommunications company Míla, says the purchase is a long-term investment. Speaking to RÚV reporters, Ardian’s CEO of Infrastructure Investments Daniel Graf von der Schulenburg stated he expects the company to hold onto Míla for decades. Icelandic politicians have expressed concern that selling the telecommunications company abroad could pose a threat to Iceland’s national security.
All of Iceland’s homes, businesses, and institutions are serviced by Míla’s nationwide telecommunications infrastructure, which includes copper wire, fibreoptic, and microwave systems. The company is therefore the basis of all telecommunications and electronic communications systems throughout the country.
Massive investment expected to impact króna
Ardian’s purchase of Míla is the largest foreign investment in Iceland in the past decade. The influx of foreign currency the purchase entails could cause short-term deviations in the exchange rate of the Icelandic króna, the Central Bank has stated. The sale is, however, expected to lead to an appreciation of the króna.
Míla has been sold to Ardian for ISK 78 billion ($603 million/€520 million). The French company took over the debts of Míla’s previous owner, Síminn ehf., which will make a profit of ISK 46 billion from the sale. Icelandic pension funds are expected to acquire shares in the company amounting to 20%, with a price tag of ISK 10-12 billion. Von der Schulenburg says negotiations with pension funds are going well.
Icelandic government sets conditions
The Icelandic government has set some requirements for Míla’s sale, including that the equipment remains in Icelandic jurisdiction and that authorities are informed of who the real owners of the company are at all times. Opposition MP Þorgerður Katrín Gunnarsdóttir, chairperson of the Reform Party, has criticised these requirements as being too little, too late. VR Union Chairman Ragnar Þór Ingólfsson has harshly criticised the sale, fearing it will lead to price hikes for users. He expressed disappointment that pension funds, who hold a majority in Síminn ehf., did not prevent the sale in the first place.
“You will be seeing us for decades”
Von der Schulenburg described Iceland as an attractive country to invest in due to its wealth, educated population, and bright future of its economy. “We like that stability and good outlook as a place to invest in,” he stated. According to von der Schulenburg, Míla is an exciting investment opportunity because “there’s still opportunities to improve. He stated that Ardian would place emphasis on extending fibreoptic lines to more sparsely populated areas and continue developing the 5G cellular network.
Prices will not rise, according to von der Schulenburg, as Ardian will aim to get more cost-efficient usage out of Míla’s infrastructure. Asked whether Ardian would consider selling the company to Russia or China in the future, von der Schulenburg stated: “No, that is not going to happen. We are a very long-term investor and there’s two reasons for that. One is that almost all of our investors are insurance companies, pension funds, and sovereign wealth funds. The majority of the funds are coming from Europe. And these investors have a very long-term perspective.”
Von der Schulenburg added infrastructure investing is long-term in general as it takes time to get a return on your investment. “Most likely you will be seeing us for decades.”