Mergers, Acquisitions and Financial Results

Econet Wireless Holdings Limited (EWH) founder Strive Masiyiwa last week vowed to press ahead with his contentious bid for a bigger stake in the telecommunications group, saying his acquisition of a Portugal Telecom (PT) stake in Mascom Wireless International would not affect his offer.

"We’re not changing the structure of our transaction in Zimbabwe," Masiyiwa told The Financial Gazette by telephone from his office in South Africa, dismissing reports by EWH minorities that the local transaction was lopsided and prejudiced them.

"We have bought Portugal Telecom out. We have exercised our rights with our partners. It was a big coup for us because we’d been given a deadline of up to Monday (15 days). We paid USD20 million for a 20 percent stake and our partners paid USD30 million for their stake (30 percent). Together we now control Mascom 100 percent," Masiyiwa said.

Masiyiwa, who currently holds a 26.1 percent stake in EWH, wants to increase his stake in the group to 64.1 percent by exchanging his 14 percent shareholding in Mascom for 918,705,438 shares in EWH. The 14 percent stake is held by TS Masiyiwa Holdings Limited (TSM). EWH will take over the entire issued share capital of TSM if the deal, which is being vigorously resisted by some minorities, is approved at an extraordinary general meeting (EGM) scheduled for September 26 2003.

Masiyiwa led a group of investors in scuttling a deal reached by PT with Citizens International to sell its 50.1 percent stake in Mascom for US$50.37 million by demanding to exercise their first refusal or pre-emptive rights to buy out PT.

Reports suggested that the deal between EWH and TSM would be put off because new investors in Mascom had become beneficiary shareholders in TSM when Masiyiwa exercised his pre-emptive rights. The reports had also suggested that the acquisition had increased TSM’s stake in Mascom to 65.1 percent, making it even more expensive for EWH to buy TSM.

But Masiyiwa said he had exercised his rights through "other vehicles" and not through TSM. Masiyiwa said last week that he felt the deal was fair and reasonable despite an outcry from some minorities. He said he would deal with critics of the deal at a shareholder briefing where he would tackle the issue of EWH shareholding in Econet Wireless International (EWI) in which EWH is a beneficiary through a trust based in the UK by way of a 50.48 percent shareholding. EWI, valued at USD40 million, has stakes in operations in telecommunication operations in Nigeria, Lesotho and Swaziland.

Masiyiwa has also blocked the purchase of a 51 percent stake in Econet Wireless Nigeria (EWN) by South Africa’s Vodacom for US$150 million, saying he has pre-emptive rights through EWI which holds five percent shareholding in EWN. The case is in the hands of the Lagos Federal High Court in which Masiyiwa is seeking an injunction to prevent EWI’s fellow shareholders from accepting Vodacom’s bid. (see In Brief below)

The Financial Gazette