Verizon Business up for grabs in South Africa

Mergers, Acquisitions and Financial Results

Verizon Business, one of the country’s largest telecommunications service providers, is up for sale. Several sources have confirmed that the black-empowered company, majority-owned by the US communications giant of the same name, is on the chopping block and that MTN, Altech and BT Group (formerly British Telecom) have all expressed interest in buying the business.

Market talk is that the company, in which J&J Group holds a 30% stake, could be sold for between R1,3bn and R2bn. MTN and Altech are seen as the frontrunners.

Verizon Business declines to confirm or deny the talk, saying only that it does not comment on market speculation.

Formerly known as UUNet, the company provides telecom services, especially Internet access, to the corporate market. It is also a reseller of wholesale bandwidth to other service providers.

Neither Altech nor MTN has warned shareholders that it is in talks, though the likely value of the deal in relation to MTN’s market capitalisation may not require it to issue a cautionary. Altech, on the other hand, would be required to warn shareholders if it were in serious talks with Verizon Business.

The rumours of a sale come in the same week that Vodacom announced an aggressive move into the types of services traditionally supplied by companies such as Verizon Business and Dimension Data division Internet Solutions.

It is understood that Vodacom held talks with Verizon Business but there was no progress because of concern that a deal would be blocked by the competition authorities, given the cellular group’s dominant position in its industry.

Vodacom also held preliminary but unsuccessful talks with Didata about acquiring Internet Solutions, sources close to Vodacom say. Vodacom Group CEO Alan Knott-Craig has publicly lamented the fact that any large acquisitions the cellphone group might want to make would probably be blocked by regulators.

Financial Mail