South Africa firm earns Sh1.3bn from sale of KDN stake

Liquid Telecom Kenya CEO Shahab Meshki. Altech plans to sell the 8.6 per cent stake that it owns in Liquid Telecom. FILE 

By John Gachiri,

In Summary

• Altech said in a regulatory filing that it would sell an 8.6 per cent stake that it owns in Liquid Telecom for $55 million (Sh4.77 billion), having acquired the shareholding in February 2013.
• Altech says the telecoms business in East Africa no longer fits its restructured operations.
• The technology firm is also eyeing a reduction of its debt load.

Altech, a South African technology firm, has completed its exit from the Kenyan market with the sale of a stake in UK company Liquid Telecom that it acquired last year in exchange for shareholding in Kenya Data Networks (KDN).

Altech said in a regulatory filing that it would sell an 8.6 per cent stake that it owns in Liquid Telecom for $55 million (Sh4.77 billion), having acquired the shareholding in February 2013.

“Altech has exercised its put option and has entered into an agreement with, inter alia, Econet Wireless Global Limited to dispose of its 8.6 per centequity interest in Liquid for a cash consideration of $55 million,” said Altech in a statement.

“This consideration will give rise to a profit on disposal of Sh1.3 billion (134 million South African rand) before tax,” it added.

The filings with Johannesburg Securities Exchange (JSE) value Liquid Telecom’s business across Kenya, Uganda, Rwanda, Zambia, Zimbabwe, Botswana, Democratic Republic of Congo, Lesotho and South Africa at $640 million (Sh55 billion).

Altech says the telecoms business in East Africa no longer fits its restructured operations.

“Following the delisting of Altech and the creation of the Altron Telecommunications, Multi-media and Information Technology division (Altron tmt), both the Altron and Altech boards no longer consider Altech’s 8.6 per cent equity interest in Liquid to be core to the ongoing operations of the Altron Group,” said the firm in a statement.

Altech is also eyeing a reduction of its debt load.

“The cash consideration from the disposal will be used to reduce the Altron group’s net debt position following the scheme of arrangement between Altron and Altech, completed on 19th August 2013,” added the statement.

Liquid operates fibre infrastructure in the southern and central Africa and is partly owned by Econet Wireless Global, the company founded by Zimbabwean telecoms tycoon Strive Masiyiwa.

Mr Masiyiwa is familiar with the Kenya’s telecom business. In 2003, he won the licence to operate Kenya’s third mobile phone network, but sold it five years later to India’s conglomerate Essar, which later launched yu Mobile.

Altech was initially operating through KDN which it co-owned with businessman Naushad Merali. The duo reduced their shareholding after they sold a combined 80 per cent stake to UK-based Liquid Telecom, a year ago, in a deal that resulted in KDN rebranding to Liquid Telecom.

READ: KDN changes to Liquid Telecoms after sale of stake

Should the board approve the sale it will result in Econet Wireless tightening its grip on the telecoms business at it is the largest shareholder in Liquid Telecom. Altech said that once the board approves, Econet is expected to pay Altech the cash by February 28.

The Kenyan unit has lost market share and sales mainly due to increased competition and the loss of big contracts including the multi-million shilling contract with Safaricom in 2011.