Huge Group is acquiring independent telco company, Otel, and merging it with its subsidiary Huge Networks.
The deal was implemented on 14 March and the Otel brand will be migrated to the Huge Networks brand during the course of 2019, the JSE-listed company said in a statement.
Huge Networks is a data service provider and communications company. Otel is a nationwide provider of voice over Internet Protocol (VOIP) and broadband infrastructure-as-a-service telecommunications solutions.
Huge Networks will acquire the businesses of Otel in consideration for shares in Huge Networks. The deal will see Huge Telecom owning 50.03% and Otel owning 49.97% of Huge Networks, respectively.
"Huge Networks has been independently valued at an aggregate value of R69 million and therefore the transactions have been valued, for JSE categorisation purposes, at a fair value of R34.5 million (being the fair value of the dilution in Huge Telecom's shareholding in Huge Networks)," the group said in a SENS statement.
"The merger of these two promising telcos is entirely in line with Huge Group's stated focus. In implementing its 'Growing Huge Strategy', Huge Group continues to focus on unlocking opportunities through the strategic acquisition of successful and complementary subsidiary operations," says James Herbst, CEO of the Huge Group.
"Huge Group needs to continue to augment its existing offering by making strategic acquisitions like Otel. It's not only about the big headline transactions but rather that we continue to actively pursue acquisitions and service diversification in a strategic manner."
Huge Group believes the deal will help scale its operations and expands both the national reach and footprint of Huge, while also increasing its network capacity and connectivity options and allowing for network synergies and efficiencies, and is expected to be revenue accretive for Huge Networks.
"We believe the merger will enable us to extend our customer value proposition and give us access to a Huge real estate of customers. We have already identified several areas of growth and the backing of Huge Group will unlock these growth initiatives," says Rad Jankovic, CEO of Otel.
The group says the VOIP and related products and services acquired through the deal will allow Huge Networks to become a more substantial provider of end-to-end ICT services. It will also provide Huge Networks with an opportunity to enter new customer segments. Economies of scale leveraged from the transactions will allow Huge Networks to provide its customers with a diversity of cost-effective ICT products and services.
"Following the transactions, Huge Networks will be well-positioned to capitalise on the further expansion of the ISP and ICT service provider industry through various organic and acquisition growth strategies."
Marius Oberholzer will remain MD of the enlarged Huge Networks.
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