ECONET EYES CONTROLLING STAKE IN TELECOM LESOTHO

Mergers, Acquisitions and Financial Results

Econet Wireless Holdings is expected to exercise its rights to buy a controlling stake in Telecom Lesotho, the sole fixed-line operator in the tiny mountain kingdom completely surrounded by South Africa.

According to Press reports from South Africa, the shares would be sold by Eskom Enterprises, a unit of electricity utility Eskom, which is selling shares as part of a R97 billion programme to focus on expanding its power generation, distribution and transmission capacity in South Africa.

Telecom Lesotho is 70 percent owned by Mountain Communications while the Lesotho government holds the balance. Eskom Enterprises owns 71 percent of Mountain Communications, while Econet has a minority stake.

"Econet Wireless has pre-emptive rights with regard to the sale of Eskom shares in Mountain Communications," Telecom Lesotho acting CEO Mr Les Carlo told Businessday, the South African online newspaper yesterday.

Chances of the rights being exercised before the end of the year were very high. "Eskom's view is that the transaction should be completed this year," he added. Telecom Lesotho has about 50,000 customers, 265 staff and annual sales of close to R220 million.

It owns Econet Ezi-Cel Lesotho, a cellphone company with about 60 000 subscribers. "The company is profitable but its margins are very tight," said Carlo. He, however, refused to say how much it made last year. Maseru-based Telecom Lesotho was extending its product range and building its data business as it braced for competition in the main towns. It was formed in 2000 when the state telecommunications company was sold to private investors. It was granted a six-year monopoly over fixed lines, which expired on February 8.

The Herald