29 November 2012
Deal gives Telecom Namibia a key foothold in the GSM operator business
Telecom Namibia on Wednesday closed the acquisition of Powercom (Pty) Ltd t/a Leo, Namibia’s second mobile operator.
The Sale of Shares Agreement was entered into between Telecom Namibia and Guinea Fowl Investments Two (Pty) Ltd, Powercom (Pty) Ltd, Investec Bank Ltd and Nedbank Ltd on 2 March 2012, followed by the Sale of Shares reinstatement and amending agreement said by the above parties on 13 November 2012. The transaction which sought to transfer control of Powercom t/a Leo to Telecom Namibia was duly approved by the Communication Regulatory Authority of Namibia (CRAN) on 11 October 2012. The transaction was already approved by the Namibia Competition Commission (NaCC) on 27 April this year. At a special ceremony held in Windhoek on 28 November 2012, Telecom Namibia paid the purchase consideration of N$2.00 to Guinea Fowl Investments Two (Pty) Ltd in respect of the acquisition of 100% equity interests in Powercom (Pty) Ltd. The acquisition gave Telecom Namibia a key foothold in the GSM operator market and created an important opportunity for the company to pursue its fixed-mobile convergence strategy. The purchase consideration of N$2.00, which is the amount which is paid by Telecom Namibia to the sellers of Powercom (Pty) Ltd, is the repayment of debt in Leo amounting to N$180 million. Of this amount, N$60 million was transferred upon signature of the Sale of Shares Agreement, while an amount of N$120 million is repayable over a three year period.
Importance of the Acquisition
Welcoming the deal on Wednesday, Information and Communication Technology Minister Joel Kaapanda said:” As shareholder, the Government is happy that the deal that was approved by Cabinet is finally concluded. The way we value this acquisition is not based on just the net tangible assets. We value this deal based on what we think eventually it will be worth.”Hon. Kaapanda said that the local mobile industry was still developing and that there was huge growth potential. Telecom’s Board Chairman Joseph Iita said the acquisition was “an exciting step forward” in support of the strategic intent of our company to go GSM.
The Minister further said that the acquisition of GSM network assets will be beneficial to strengthening the overall operation efficiency of Telecom Namibia's mobile service, providing a better customer service, sustainable growth, competitiveness and innovation into the future.” “We envision Leo’s takeover as a rosy garden of straightforward synergies thanks to a set of complementary network technologies, spectrum positions and operations,” Iita said. He said Leo was a critical resource for Telecom Namibia in the company’s quest to remain competitive and deliver shareholder value, adding that it was good for competition and innovation, especially in the mobile arena.