Gateway buys GS Telecom for $37.5m

By Staff Writer for Gateway Communications
Johannesburg, 09 May 2007

Gateway Communications says it has acquired GS Telecoms, an African enterprise service provider with operations in 27 African countries, for $37.5 million.

The transaction, which is to be completed by mid-May, will be financed through a combination of cash and funds from a newly-issued bond, says Gateway Communications in a media statement.

The transaction is expected to strengthen Gateway's position as provider of voice and data connectivity services in sub-Saharan Africa, boosting its customer base by an additional 200 customers to over 1 200 customers in over 37 African countries.

"This is a substantial acquisition, which marks a further step in our strategy to consolidate our leading position in the rapidly growing African communications market," says Gateway president, Julian McIntyre.

GS Telecom was founded in 1994. It provides a broad range of secure network services and turn-key communications systems, including design, implementation and management, to predominantly multinational companies in the energy, mining, consumer products, logistics, banking and telecommunications sectors.

Major customers include MTN and Celtel Total, Shell, ExxonMobil, Coca-Cola, Citi and Standard Chartered Bank.

GS Telecom president and CEO Steve Chapman says Gateway and GS Telecom are an excellent match. "Gateway has a major international presence, while GS Telecom has strong local support," he says.

Gateway says the transaction also increases its geographic footprint and provides greater access to the rapidly-growing Nigerian market. GS Telecom has 216 employees in West Africa, with 150 based in Nigeria.

The enlarged business will also benefit from network economies of scale with access to the largest private satellite footprint on the continent, consisting of 25 transponders of capacity and to the SAT-3 undersea cable, says Gateway.

Gateway says the combined pro-forma revenues for the year ended 31 December 2006 for Gateway and GS Telecom were $180 million and EBITDA was $28.3 million.