Vodacom acquires 10% of iBurst

By Damaria Senne, ITWeb senior journalist

Johannesburg, 14 Nov 2006

iBurst confirms Vodacom is in the process of finalising the acquisition of 10% of its equity shareholding.

The deal should be finalised by the end of November, once a number of conditions have been met, says iBurst MD Alan Knott-Craig Junior.

Knott-Craig would not disclose how much the deal was worth, or who among the current shareholders was selling the shares.

Earlier this year, a 40% stake of iBurst, belonging to US-based gaming company Gtech, was sold to a local consortium that includes Blue Label Investments.

Creating synergy

The partnership between Vodacom and iBurst provides the organisations with the opportunity to share resources and create synergy, says Knott-Craig.

One of the resources iBurst brings to the table is WiMax spectrum, which the Independent Communications Authority of SA did not allocate to mobile operators.

iBurst also has "good technology that targets a niche market", but is not really for 3G/HSDPA applications, providing further opportunities for Vodacom, Knott-Craig says.

"iBurst, on the other hand, stands to gain a capital injection, as well as the credibility that is associated with the Vodacom brand," he says.

Knott-Craig acknowledges that iBurst has done well in the broadband arena, and has gained a lot of credibility in the past 10 months.

"But I must say a lot of South Africans are very brand conscious and people may worry about a about a small company like ours not being around in the long-term," he says.

Network access

Vodacom also offers iBurst the benefit of using its transmission network to complement the infrastructure that iBurst already has in place, he says.

"We are getting too many customers and, while we have enough base stations and the resources to build more, it is, however, difficult to get sites and permission from landlords," he notes.

Knott-Craig adds that the potential acquisition is good news for iBurst subscribers who will be among the first to benefit from the strategic partnership.

Vodacom had not provided comment by the time of publication.