Tribunal nod for Reunert, Altron JV

Johannesburg, 18 Jan 2007

SA's Competition Tribunal has given Reunert and Altron the go-ahead to form a joint venture (JV) telecommunications cable company, as long as a condition is met.

The merger will see the formation of a new company with expected revenue of about R400 million that will comprise Reunert's telecoms cable assets, held in a subsidiary called ATC, as well as Altron subsidiary Aberdare Cables' telecoms cable interests.

The tribunal says the formation of a new jointly held company is conditional on Aberdare disposing of its 33.3% stake in Kewberg Cables and Braids. The buyer must be independent of both companies and the sale should happen soon, it adds.

The new company expects 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.

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.

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.

Doubled volumes

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 subsequently 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.