Mergers, Acquisitions and Financial Results

A consortium led by telecommunications group Communitel is expected to snatch government’s warehoused 25% stake in the second phone operator’s licence, it emerged last week. This would effectively increase Communitel’s stake to 38%, making it the largest single shareholder in the second operator’s licence.

Communitel holds a 13% stake, having failed to acquire the coveted 51% controlling stake.Its bid, together with rival Two Consortium’s application, were rejected by the Independent Communications Authority of SA (Icasa) as being substandard. Government then awarded each a 13% stake.

Speculation in the market is that Communitel has partnered with empowerment company Gondwana Telecommunications and has submitted an unsolicited bid for the 25% stake. Their bid is said to be funded by Old Mutual.

Gondwana Telecommunications was one of the companies that put in bids for the 19% black economic empowerment stake in the second operator in 2002. It lost to Nexus Connexion, which is headed by Kennedy Memani. Old Mutual declined to verify these rumours yesterday.

But Communitel conceded that it had had "a range of discussions" with government about acquiring the warehoused equity.Communitel director Mike van den Berg said Old Mutual "has always been one of our strongest funders". He was confident the insurance group would back it if it won the remaining 25% equity stake. Van den Berg would not be drawn on whether Communitel had submitted a bid.

But the Communication Department’s Director-General, Pakamile Pongwana, confirmed receiving Communitel’s bid and said a number of other companies had expressed interest. The Minister (of Communications, Ivy Matsepe-Casaburri) will make a decision in due course," he said.

Memani, who reportedly wants to become CE of the second operator, has said that Communitel and Two Consortium have been trying to strike a secret deal with government for the controlling stake. He said recently that such an "eventuality would be detrimental to the market and the second operator".

"We do not want to be led by someone who has been rejected by Icasa. It is not good for the market and the funders," he said.But the second operator’s interim chairman, Transtel CE Karl Socikwa, has distanced himself from Memani’s remarks. Socikwa said Memani’s remarks "do not reflect the views of the shareholders operating as a collective".

Individual shareholders were, however, free to express their opinions on matters that fell outside the scope and mandate of the second operator’s interim board, he said.

Business Day