JSE-listed Altech has swapped its troubled East African stake for equity in Liquid Telecommunications, a telecommunications company that focuses on developing markets.
It says the combination of Liquid's and Altech East Africa's networks will "create the African continent's largest single terrestrial fibre network connecting more African countries than any other single terrestrial network".
In a statement issued to shareholders, Altech says it will sell its shares and claims on a loan account in Altech East Africa (AEA) on a net debt-free and cash-free basis to Liquid and will take up an 8.6% stake as part of the transaction.
"The combination of Liquid's southern and central African network facilities with those of AEA in East Africa will create a formidable pan-African entity that will be able to offer unparalleled communications, access and support services to major international corporate clients, in particular."
Liquid offers fibre, satellite, infrastructure and international carrier services to fixed and mobile telecommunications operators, Internet service providers (ISPs) and enterprises in developing countries - particularly in central and southern Africa.
"Liquid operates and owns one of Africa's most extensive fibre-optic networks, which provides services to customers in South Africa, Botswana, Lesotho, Zimbabwe, Zambia and the Democratic Republic of Congo (DRC). Operations in a further two countries are under development," says Altech.
Altech adds it will initially have 8.6%, but has the option to grow this stake at a later stage. The company explains that its East Africa network will benefit from becoming part of a larger, specialist network and ISP operator with more extensive experience in building, maintaining and operating networks in Africa.
In 2007, Altech formed Altech Stream Rwanda (ASR) and a year later acquired controlling shareholdings in the companies now known as Altech Kenya Data Networks (KDN), Altech Swift Global (ASG), and Altech Infocom. KDN had earlier established Africa Digital Networks (ADN) in the DRC, which is currently a wholly owned subsidiary of KDN.
Collectively, these companies operate as network service providers and ISPs in East and central Africa.
Altech has 60.8% of KDN, and 51% of ASG and Infocom, while ADN is wholly owned by KDN, and ASR is 90% owned by KDN. After the deal, Liquid will own 80% of KDN and Infocom, 100% of ASG, Altech Data International - formed in 2009 - and ADN, and 75% of ASR.
Altech East Africa was profitable for two years after Altech bought its 51% stake in 2008, but then ran into difficulties as key projects were delayed, while the competitive market moved rapidly. At the end of the first half of 2012, Altech wrote the operation down to nothing after it made an operating loss of R89 million in the half year.
Altech CEO Craig Venter previously said that Altech had started a formal process to identify and engage with network operators with deep pockets in a bid to find a partner as the operation is capital-intensive.
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