SPECULATION that Jersey Telecom could be worth more than £200m. has reawakened local criticism that Guernsey Telecom was given away. Cable & Wireless bought the utility from the States in 2002 for a reported £30m., but the reality of the transaction was that it essentially went for free.

In May 2002, the States received £12.2m., after a £1.6m. commission fee, with the guarantee of two deferred payments of £5m. over the following 24 months.

But part of the assets that C&W acquired was £13.2m. in cash, and critics suggest that the additional payments, amounting to £10m., would have come straight out of company profits.

Public Services minister Bill Bell said it was the biggest and most costly mistake made since he joined the States in 1988.

Former GT managing director Alec Forty said that he had been tearing his hair out ever since.

Deputy Bell said his criticism was of the previous States for making such a costly error.

‘I am glad, no, I am proud, that I was not part of the decision to dispose of the utility.’

The Office of Utility Regulation predicted C&W Guernsey generated an almost £13m. profit last year.

‘We can conclude that the company is performing extremely well with vastly improved profits,’ said Deputy Bell.

Mr Forty said that a few years before it was sold, GT was valued at £70m. Deputy Bell always thought it was worth between £70m. and £100m.

‘I have nothing against C&W, indeed I wish them well, but I believe that if we had retained a commercialised Guernsey Telecom, it could have performed very well, as indeed Jersey has done.’

But now that island’s Treasury minister, Terry Le Sueur, has put forward a proposal to sell Jersey Telecom.

It is currently out for consultation and is likely to come before the States in the autumn.

C&W has already expressed an interest in it and is anticipated as a likely bidder.

The estimated value of more than £200m. stemmed from the value C&W put on the Bermudan telephone company, KeyTech.

Earlier last week, the company put forward a US$205m. bid to buy KeyTech and if the same calculations were used for JT, the price would be more than £250m.

And experts in business valuation say a figure of £200m. for JT would not be unrealistic for a buyer already in the telecoms sector. Commentators say the utility would be worth more to a company already in the sector because of economies of scale and synergies that could be achieved.

However, Jersey chief executive of C&W David Smith said the company could not make any comment about any possible bid at this stage.

Senator Le Sueur said the price of the company looked quite encouraging.

JT chairman John Henwood said it was too early to talk about selling.

However, he did say that due to the foresight and effort of those who ran the utility before he came along, there had been a huge investment in infrastructure.

‘Jersey Telecom has always been way up there in terms of investment within the business. If the States do decide to sell, that will certainly contribute strongly to whatever price is paid,’ he said.