Vodacom buys Gateway Communications

Mergers, Acquisitions and Financial Results

Vodacom has finalised a deal to acquire carrier services and business network solutions subsidiaries of Gateway Telecommunications SA (Pty) Ltd ("Gateway") for an enterprise value of approximately US$675 million.

An announcement made last week says, the deal once concluded will also see Vodacom make whole payment of approximately US$25 million in relation to Gateway's high-yield bond. Commenting on the transaction, Pieter Uys, Chief Executive Officer designate of Vodacom Group, said a new deal would allow his company tap into growth potential on African market.

"The acquisition of Gateway reflects Vodacom's strategy to reposition itself as a leading pan-African provider of communications services and to diversify from its current status as primarily a mobile-centric network operator. We believe that Gateway's significant presence across Africa will allow Vodacom to tap into the huge potential for growth in business services and connectivity and will enhance our position with multinational corporations," he said.

On the other hand, Gateway's Chief Executive Officer, Peter Gbedemah, added: "this is an exciting milestone in Gateway's development as a unique pan-African service provider. We will increase resources, efficiency, and product range and continue our relentless focus on meeting requirements of all Africa's mobile networks and multi-national corporations."

Gateway is Africa's largest independent provider of interconnection services via satellite and terrestrial network infrastructure for both African and international telecommunications companies. Gateway also provides an extensive range of high quality, end-to-end connectivity solutions to multinational corporations operating across Africa.

However deal with Vodacom does not include Gateway broadcast services group, which will be retained by current owners.

With approximately 350 employees in 17 countries throughout Africa and Europe, and annual sales estimates at around US$257 million, Vodacom says acquisition of Gateway is in line with its growth strategy and offers multiple strategic benefits including, accelerated international expansion and presence in key markets throughout Africa

It further said a deal will positions Vodacom as partner of choice for multinational customers and international telecommunications providers seeking African connectivity adding that with Gateway's blue chip customer base this will enable marketing of converged fixed and mobile offerings across Africa.

The deal which is yet to be approved and is subject to certain conditions, including approval from South African Reserve Bank and relevant regulatory and competition authorities, will also affect Gateway's subsidiaries in Mozambique, Tanzania as well as others to be appointed under the transaction.