Controversial Telecommunications Company Sale Up in the Air

fibreoptic cable infrastructure

French company Ardian is not prepared to finalise its purchase of Icelandic telecommunications company Míla unless the purchase agreement is amended, RÚV reports. Iceland’s Competition Authority set several conditions for the purchase following a meeting with Ardian representatives last week, informing the company that the purchase would not be approved unless those conditions were met. Ardian’s spokespeople say that one of the conditions contradicts the terms of the purchase agreement.

Key infrastructure valued at ISK 78 billion

Míla, which owns and operates nationwide telecommunications systems in Iceland, was sold to Ardian last year. All of Iceland’s homes, businesses, and institutions are serviced by Míla’s telecommunications infrastructure, which includes copper wire, fibreoptic, and microwave systems. The purchase agreement from last October was evaluated at ISK 78 billion [$570 million; €562 million].

Various parties in Iceland have expressed concern regarding the sale of such important infrastructure to a foreign company. Iceland’s government imposed certain conditions on the sale as well as amending legislation in an effort to ensure national security would not be compromised by Ardian’s ownership of Míla. Ardian

Further negotiations likely

A notice from Síminn to Nasdaq Iceland stated that the Competition Authority’s conditions were burdensome and negatively impacted the purchase agreement for Ardian. The notice stated that further negotiations were required between Síminn and Ardian, as well as between Ardian and the Competition Authority. Ardian is a fund management company and its representatives have stated that the purchase of Míla is a long-term investment.

Ardian representatives have not specified the details of the dispute.

Opposition Abstains from Voting on “Míla Bill”

Iceland's Althing

Iceland’s Parliament passed the so-called “Mila bill” today with 33 votes in favour, RÚV reports. Fifteen MPs abstained from voting, all members of the opposition. The bill is intended to ensure national security in light of the sale of Iceland’s telecommunications company Míla to French fund management company Ardian.

Míla, which owns and operates nationwide telecommunications systems, was sold to Ardian last year. All of Iceland’s homes, businesses, and institutions are serviced by Míla’s systems, and many expressed concern that such important infrastructure was being sold to a foreign company. Prime Minister Katrín Jakobsdóttir has called telecommunications infrastructure “a key issue for public security in every society.”

Read More: Parliament Rushing to Ensure National Security

Ardian’s purchase of Míla was discussed in the National Security Council and new legislation was drafted, with the stated goal of strengthening and securing the legal basis for electronic communication with regard to national security. Helga Vala Helgadóttir, MP for the Social-Democratic Alliance, has argued that there were many red flags in the government’s handling of the case and that the legislation did not ensure consumer security.

The newly-passed bill, introduced last term by then-Minister of Justice Áslaug Arna Sigurbjörnsdóttir, amends the Electronic Communications Act, legislation governing the Electronic Communications Office of Iceland (ECOI), and legislation on foreign investment in business operations.

Parliament Rushing to Ensure National Security

Iceland’s parliament has only a few days to approve legal amendments that are intended to ensure national security in relation to the sale of telecommunications company Míla, RÚV reports. The company, which owns and operates nationwide telecommunications systems, was recently sold to French fund management company Ardian. Various parties in Iceland have expressed concern regarding the sale of such important infrastructure to a foreign company. The Icelandic government has imposed certain conditions on the sale.

Read More: Purchase of Míla is a Long-Term Investment

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. Former Minister of Transport Sigurður Ingi Jóhannsson met with Ardian representatives last summer, and later stated he was optimistic that an agreement could be reached on their acquisition of Míla that would ensure national interests were protected. He mentioned conditions for the sale, including mandating that certain equipment used by Míla would remain in Iceland, that other equipment would be from countries that are Iceland’s defence allies, and that Icelandic authorities would be kept informed of the true owners of Míla at all times.

Áslaug Arna introduced the amendment bill concerning Míla in Iceland’s Parliament yesterday, saying it would strengthen and secure the legal basis for telecommunications with regard to national security. Opposition MPs criticised the government for introducing the bill so late, with Reform Party Chairperson Þorgerður Katrín Gunnarsdóttir saying the working process of the bill has been characterised by carelessness. More comprehensive changes to the legislation are expected next year.

Discussing the sale of Míla, Iceland’s Prime Minister Katrín Jakobsdóttir called telecommunications infrastructure a “key issue for public security in every society.”

Purchase of Icelandic Telecommunications System is Long-Term Investment, Says French Company

fibreoptic cable infrastructure

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.”

Telecommunications Security Must be Ensured Despite Foreign Ownership, Says Prime Minister

Prime Minister of Iceland Katrín Jakobsdóttir

Iceland’s government is working to ensure that the sale of telecommunications company Míla will not pose a threat to national security, mbl.is reports. Míla is a subsidiary of Síminn hf., which announced yesterday that it has signed an agreement with a French fund management company regarding Míla’s possible acquisition. Prime Minister Katrín Jakobsdóttir is preparing a bill to ensure telecommunications security, and therefore national security in Iceland, regardless of the ownership of important infrastructure.

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. The notice on Míla’s sale states that negotiations are well underway and the potential purchase is fully financed. If acquisition is successful, a large part of Iceland’s telecommunications infrastructure will be in the hands of foreign investors.

Transport Minister Sigurður Ingi Jóhannsson is in discussions with Síminn to ensure that Iceland’s communications security, and national security, are protected regardless of Míla’s ownership. The Prime Minister stated that the company had done well to keep the National Security Council informed on the sale’s progress.

Discussing telecommunications infrastructure, Katrín stated “it was perhaps not entirely foreseen how important such infrastructure would be, but now with technological developments and other things, it has become a key issue for public security in every society.” Katrín says she is preparing legislation that ensures foreign investments in important infrastructure would be carefully reviewed and plans to introduce a bill on the matter in Parliament this winter. The bill is based on existing legislation in Denmark and Norway.

This is not the first time Iceland’s institutions discuss foreign, private ownership of local infrastructure. The National Security Council has discussed foreign ownership of card payment companies and the Central Bank of Iceland is currently developing a domestic payment system that could be used as a backup if needed.