Sentech buys Infosat

Johannesburg, 26 Feb 2003

State-owned broadcast signal distribution company Sentech is to turn Internet service provider Infosat into a wholly owned subsidiary as it prepares for a larger role in South African telecommunications.

Sentech says it has reached an agreement to buy 30% of Infosat from the company's only other shareholder, holding company Ared. The value of the deal has not been disclosed, but Sentech says it will do so once its own shareholder, the government, approves the transaction.

The announcement of the deal comes only weeks after the sudden departure of Infosat MD Eduard du Plessis and at least one other staff member from the company. Infosat was originally tight-lipped about the departure and would say only that Du Plessis had taken a paid leave of absence.

He has since confirmed that he has resigned and will pursue other interests. "I'm not the corporate type," he says.

Non-executive director Ben Bets has been appointed acting MD.

Du Plessis will be a beneficiary of the acquisition; he owns 40% of Ared by way of a family trust. The other 60% is owned by another holding company in which Angelo Roussos, his former partner, and some other Infosat staff members are shareholders.

Roussos and Du Plessis were the joint MDs of Infosat, then named Infoline, when management bought the company from Pinnacle Holdings in early 2000 in a deal worth about R6 million. Sentech became the major shareholder in Infoline shortly thereafter.

Roussos joined Sentech last year to head up the multimedia division created after the company was controversially granted a "multimedia licence", which is a telecommunications licence allowing the signal distributor to start carrying data traffic. Sentech says Roussos played no role in negotiating the transaction.

In a short statement released yesterday, Sentech said the acquisition would "add substantial value to Sentech's multimedia and carrier-of-carrier licences".

Both licences were issued to the company in May when Telkom's monopoly on certain telecommunications services expired. The carrier-of-carriers business, in which it handles international phone calls on behalf of other operators, has already seen the company sign up its first customer and court all three cellular providers.

The multimedia licence, however, is the subject of ongoing controversy. Roussos believes the licence allows Sentech to build its own national data network and offer services such as video conferencing. Telkom, which does profitable business in all the areas Sentech is considering, begs to differ and is widely expected to vigorously defend its turf.

Roussos did not return calls requesting comment and the exact role Infosat is to play within Sentech is not known. However, the company is expected to soon launch services using digital terrestrial broadcasting or other wireless technologies to offer a replacement for data lines leased from Telkom.

Sentech has reassured Infosat clients that the acquisition and a planned rationalisation exercise will have no negative influence on services.