Altech-Econet deal finalised

By Iain Scott, ITWeb group consulting editor

Johannesburg, 26 Nov 2004

Allied Technologies (Altech) has completed the acquisition of 50% of Econet Wireless Group (EWG).

Altech CEO Craig Venter says the deal will be implemented as all the conditions precedent to the deal have either been fulfilled or waived.

The venture was subject to three conditions - South African Reserve Bank approval, the approval of the Reserve Bank of Zimbabwe relating to EWG`s acquisition of Econet Holdings` 14% stake in Mascom Wireless Botswana, and the Papua New Guinea government`s approval of EWG`s investment in Telikom PNG.

Both the South African and Zimbabwean central banks have given their approval, and Venter says significant progress has been made in obtaining the fulfilment of the final condition.

Talks are at an advanced stage and the finalisation of the Papua New Guinea deal is imminent, he adds.

"However, in order to accelerate the implementation of the overall transaction, Altech has agreed to exercise its right to waive this requirement for the fulfilment of this condition."

When the Altech-EWG deal was announced originally, the plan agreed to by Altech and the EWG shareholders, collectively referred to as TSMI, was to set up a jointly controlled South African holding company, Newco. Certain telecommunications interests of EWG, as well as cash from Altech, were to be introduced into Newco.

However, this plan has changed, and the structure will be simplified.

"Altech will now invest directly into EWG and will hold 50% plus one share of the issued ordinary shares, via a cash subscription. TSMI, on the other hand, will exchange its telecommunications interests selected for this purpose for the issue of ordinary shares in EWG. These shares will amount to 50% less one share."

TSMI will have a call option to equalise its shareholding in EWG with that of Altech in future, subject to South African Reserve Bank approval.

"I am both pleased and excited that Altech now has an entry point into mobile network operations," Venter says. "This venture will significantly elevate Altech on the value chain and will also strategically position the group away from the supply of equipment and towards the development of solutions and services."

The Altech share was trading at R43.20 on the JSE this morning, up 80c or 1.9% from yesterday`s close.