A lack of ownership by historically disadvantaged persons has blocked Huge Group from transferring two licences from its subsidiary Huge Telecom to itself.
"We wanted to transfer the licences from Huge Telecom to Huge Group so that all subsidiary companies in the group could make use of a single licence rather than needing to have multiple licences," Huge Group CEO James Herbst told ITWeb via e-mail.
Huge Telecom is the holder of two licences: an individual electronic communications service (IECS) licence and an individual electronic communications network service (IECNS) licence.
However, in a Government Gazette on 25 January, the Independent Communications Authority of South Africa (ICASA) stated the transfer of the two licences had not been approved.
An ICASA spokesperson confirmed with ITWeb that the transfer was not approved due to non-compliance with the provisions of section 9(2)(b) of the Electronic Communications Act (ECA), which requires a minimum of 30% equity ownership to be held by persons from historically disadvantaged groups (HDGs).
"In terms of Regulation 12(c) of the Processes and Procedures Regulations for Individual Licences, 2010, as amended, the authority may refuse to transfer a licence where the transferee's ownership and control by historically disadvantaged persons is less than 30%," ICASA says.
Huge Telecom was established in 1993 and supplies managed last mile voice and data connectivity solutions using wireless, GSM-based fixed cellular technology. It is 100% owned by Huge Group.
"When the original VANS licences (which later were converted to IECS and IECNS licences) were granted to Huge Telecom, Mojaho Trading, an HD Group, held 30% of Huge Telecom. It converted this stake into shares in Huge Group which got diluted as a result of acquisitions," Herbst explains.
He would not confirm how much HDG ownership the company currently has, saying only that it "falls under the 30% requirement".
Mojaho Trading effectively sold out of the company in January 2014 when it offloaded its last 5.6 million shares, for a total value of R2.4 million.
Herbst says the group respects ICASA's decision and there will be "no significant commercial impact" from the ICASA ruling as "the impact is more administrative in nature".
"The transfer of the licences was a nice to have and not a must have, so no further steps are being contemplated."
He says transformation is important to the group and getting more historically disadvantaged persons to invest in the company "is the top priority at Huge".
Huge Group is listed on the Johannesburg Stock Exchange and this morning the stock was trading at R7.80 per share. Over the last 12 months, the share price has risen 85.7%, according to Bloomberg data, while over the past five years, the stock has appreciated by almost 905%.
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