Tribunal to hear telecoms cable merger

Johannesburg, 15 Jan 2007

The Competition Tribunal will this week hold hearings into the proposed formation of a new company intended to house Reunert and Altron's telecommunications cable assets.

The new company will merge Reunert's telecoms cable assets, held in a subsidiary called ATC, as well as Altron subsidiary Aberdare Cables' telecoms cable interests.

The proposed merger will result in the formation of a company that is expected to benefit from increased demand for telecoms cable as Telkom rolls out its next-generation network, Neotel enters the market and further liberalisation is expected.

Reunert currently holds 74.9% of ATC, with the remainder held by black economic empowerment company Powerhouse Utilities. Aberdare Cables is 70%-owned by Altron subsidiary Powertech, with the remainder being held by BEE partner Izingwe Consortium.

ATC, a cable company housed within cable firm Cbi-electric, comprises African Cables and Telecom Cables. After completion of the merger, only the telecoms cables unit will be merged into the new entity, says a Reunert spokesman.

Competition Commission approval

Reunert's 2006 annual report states that ATC offered to buy out Aberdare's telecoms cable business in exchange for half the shares in a new company to be named Cbi-electric Aberdare-ATC telecom cables.

"The new entity will be a 50:50 joint venture between Reunert and the Altron group and is subject to Competition Commission approval," it said. The Competition Commission has since recommended the merger be approved, subject to Aberdare disposing of its 33.3% shareholding in cable firm Kewberg.

During the past year, Reunert reported a change in the fortunes of its telecoms business after a competitor in Port Elizabeth closed down. The annual report states "copper cable volumes doubled and fibre optic cable market share went from 20% to 30%. Telkom, however, remains the dominant customer."

The company says demand for fibre optic cables is expected to grow, while the copper-cable market is expected to remain flat.