Altech secures major deal

Altech secures major deal:

 Allied Technologies Limited (“Altech”) today announced that it has acquired a controlling interest in three subsidiaries of Kenya’s Sameer ICT group for US $85.2 million (approximately R650 million).  The transaction, effective 1 March 2008, sees Altech acquire a 51% controlling interest in Kenya Data Networks Limited (KDN), Swift Global (Kenya) Limited (Swift) and Infocom Limited (Infocom). 
 

“These acquisitions support our strategy of moving up the telecoms value chain, expanding our geographic presence in Africa and operating at technology’s cutting edge,” commented Altech’s CEO Craig Venter. “We are now the leading broadband network operator in East and Central Africa.”

“This acquisition provides Altech with the opportunity to participate in the high growth converged technology wave, which fits perfectly with our already stated TMT convergence strategy” added Venter.

KDN is the leading full service digital communications data operator in Kenya. Its network infrastructure includes a 1,000km fibre line from Mombasa to Nairobi, an additional 450km of fibre in Nairobi, a fibre link to the Uganda border (ADSL services to the ISPs)  over 450 WiFi (wireless local area network) hotspots and a satellite based international gateway.  KDN offers access to its network at wholesale rates to internet service providers and large corporate customers. It has an international gateway licence for Kenya and advanced plans to expand to other African countries, including the DRC, Rwanda, Uganda, Tanzania, Burundi, Zambia and Malawi. It also intends to participate in a future African east coast undersea cable system.

Swift is a leading internet service provider in Kenya and Tanzania. Utilising KDN’s infrastructure and network capacity, it provides corporate virtual private network and wireless solutions, as well as VoIP (voice over internet protocol) services. Its products are aimed mainly at business users as contract customers. Swift consumes a large portion of the installed capacity of KDN, resulting in a close relationship between these two companies.

Infocom offers broadband, internet and IT services in Uganda. Having commenced business in 1995 and later becoming a division of Celtel (then MSI), it has comprehensive agreements with Celtel with respect to the co-location of equipment in the cellphone operator’s facilities and other services provided by Celtel. Infocom is the only wireless broadband provider in Uganda. It is licenced to offer full communications services, including international traffic, as well as voice, data and video over any medium and technology.  The company operates a wimax network and satellite based international gateway.

 “The acquisitions provide us with access to Sameer’s regional expertise,” says Venter, adding that Altech and Sameer have forged an alliance to pursue further opportunities in the region.  “Through this acquisition, Altech avoids the so-called “J-Curve”, which involves major investments in capital expenditure to build a new start-up network and to apply or bid for scarce network licences.  In this case we buy into an already existing network that has pervasive licences, which is generating substantial profits”.

Sameer Group is one of the most prominent businesses in East Africa and has wide ranging interests. Sameer Group is also looking to foster cooperation in other industries with Altech’s sister companies, such as Powertech Technologies Limited (“Powertech”) and Bytes Technology Group Limited.

Altech will pay a total cash consideration of US $75 million for its 51% interest in KDN; Swift and Infocom.  Of the total US $ 75 million, US $ 10 million will be held in escrow, pending achievement of an agreed combined profit after taxation of KDN, Swift and Infocom, for the twelve months ending 31 December 2008.  

In addition, US $20 million in new capital will be injected into KDN, Swift and Infocom – 51% will be provided by Altech and 49% by Sameer and its associates. The total Altech cash outflow will accordingly be US $ 85.2 million, comprising the US $75 million for the acquisitions and the US $10.2 million cash injection.

The acquisitions follow the completion of a satisfactory due diligence of KDN, Swift and Infocom by Altech, approvals by the board of Altech, the South African Reserve Bank and by the relevant regulatory authorities in Kenya and Uganda.   

Venter says “There is a strong cultural fit with Sameer, which like Altech is a family-owned group which is well regarded for its entrepreneurial approach and disciplined corporate governance”.  “Our envisaged long-term partnership with Sameer which is a substantial group with significant skills and contacts in the region, gives us a strategic advantage making Altech the pre-eminent data operator in East Africa”.  “The transactions are very attractive to Altech from a financial perspective, particularly if the current year and future projected profits are considered” concluded Venter.

Naushad Merali, the Group chairman of Sameer Group said, ”Partnering with Altech is in line with the Group’s policy to look for strong strategic partnerships with the aim of increasing the portfolio of products and services and improving the service quality offered.  We identified Altech as the perfect fit for our Pan African strategy and expansion”.

Sameer Investments Limited is the holding company of a group of operating entities in East Africa (“Sameer Group”).  Founded by its current executive chairman, it records consolidated annual revenue exceeding US$1billion.  Its operations employ a total of 19,000 people.  Sameer Group controls most of its operating subsidiaries.

Besides its shareholding in KDN, Swift Global and Infocom, Sameer Group also has interests in Dimension Data Solutions and GSM operator, Celtel Kenya Ltd.

Outside of the ICT sector, Sameer Group has interests in the energy and power; construction; financial; transport; agriculture and dairy industries. Sameer also owns a substantial property portfolio, the most prominent of which includes an industrial park and export processing zone.  

Outside of these acquisitions, Altech is pursuing other initiatives in its quest to become a prominent broadband network operator on the African continent. Altech has already acquired usage rights to world leading technology from Xiocom Wireless Incorporated (USA) and is in the process of establishing a greenfields network operation in Rwanda.