Mergers, Acquisitions and Financial Results

Namibia Post & Telecom Holdings Ltd. (NPTH) last successfully concluded a purchase transaction of MTC shares, in which NPTH is acquiring the total share capital of 49% held by two Swedish companies.

In terms of the transaction, NPTH, which currently owns 51% of the share capital in Mobile Telecommunications Ltd. (MTC), will acquire the total shares held by Overseas Telecom AB (26%) and Swedfund International AB (23%).

The deal places NPTH in full control of MTC as one of its subsidiary companies. NPTH is 100% owned by the Government of the Republic of Namibia.

NPTH took up the offer made by the two Swedish companies to buy their stake in MTC at a stock-and-barrel purchasing price of N$388 million, with an additional maximum amount of N$110 million to be paid over the next three years, depending on the financial performance of MTC.

The deal was concluded last week and is funded by a consortium loan funding agreement between four leading local banking institutions, consisting of First National Bank, Commercial Bank of Namibia, Bank Windhoek and Standard Bank Namibia.

The Swedish partners stated that they have participated in the formation and development of MTC and since the company now is mature and well performing it is an appropriate time to exit.

MTC, which has expanded its total customer base to about 300,000, including post-paid and pre-paid customers, has been granted a mobile telecommunications operator’s license by the Namibia Communications Commission (NCC) on 20th July 1995 and has since then invested approximately N$ 600 million in the local mobile communications network infrastructure.

In terms of the license conditions, the NCC has granted approval for the sale of any shares in MTC, involving more than 20% of the share capital.

NPTH has no intention to keep the acquired shares in the long term, and intends disposing of 15% of the shares within the Namibian market within a year from the date of the sale. It is foreseen that this block of shares will be used to lead the information and communication technology sector (ICT) and other sectors forward in implementing broad-based black economic empowerment.

NPTH also intends to sell 34% of the issued share capital of MTC to a strategic mobile telecommunications technical partner at a later stage.

Mr Bengt Strenge, a Swedish national and the current Managing Director of MTC, will remain in his position under a new one-year employment contract, according to the Chairman of NPTH, Mr Steve Motinga.

The rest of the management team and staff of MTC will remain as is and will not be affected by the take-over.

Mr Motinga said that, now that the NPTH controls 100% of the share capital in MTC, the Holdings company will ensure that capital investments in the mobile infrastructure are done, not only limited to addressing the current congestion in the network, but also to ensure that MTC will continue with its normal business operations as usual, and stay the market leader in this sector.

MTC has experienced a healthy growth of its customer base in line with the general growth trends in the mobile communications sector in Africa, and where, in Namibia, the current mobile teledensity rate of 16,4% has fast exceeded the fixed line teledensity rate of 6.6%.

"The buying of the MTC shares and the acquiring of the total ownership of this financially healthy company, is an excellent deal that stands to bring many benefits to the Namibian public and the Government of Namibia," said Mr Motinga.

"We are now in total control of MTC, although this is only temporally until we have more Namibian owners and strategic technical partners on board of this ship. This excellent acquisition is enabling us to direct the future of this company in such a way that we can bring more benefits to the mobile users. Mobility in communications is clearly the most preferred way in which Namibians want to communicate and we promise that we will deliver to their expectations," said Mr Motinga.

NPTH is, through the deal, acquiring human assets in the form of 200 plus well-trained professionals in customer care, sales and service, radio and GSM technology, information technology, accounting and a professional management team.

Other major tangible assets consist of, among others, almost 200 GSM base stations and repeaters, Siemens mobile switching and transmission-mission equipment, various IT management systems, two customer billing platforms, a distribution network of 17 MobileHomes and global roaming agreements with 94 countries and 208 different operators.

Mr Motinga expressed his appreciation, on behalf of the NPTH Board and its Shareholder, to the departing Swedish partners for their assistance in setting-up and co-managing a mobile communications company in Namibia successfully.

"MTC is clearly such a resounding business success story that took off smoothly like a jet, right from the start when it was launched in 1995.

"We are indeed grateful for the work our Swedish partners have done in Namibia. We are also thankful for the Government of Sweden for having given us the opportunity to learn from our partners’ global experience, and to draw from their expertise in the mobile business.

"In this process of working together, we also gained invaluable practical experience in the professional management of a sound joint venture business enterprise spanning across two nations.

"The fact that we brought some of the shares back into the hands of Namibians, is also a strong indication of our confidence in the Namibian economy. We have every reason to look forward to a very bright future for MTC and the Namibian mobile customers, in general," said Mr Motinga.