Rumours soar on DataPro cautionary

A cautionary issued yesterday by "alternative telecommunications provider" DataPro has the investor market abuzz.

Shortly before midday, the company announced it was in negotiations that may have a material effect on the price of its securities.

The standard cautionary did not mention whether the negotiations involved an acquisition or sale.

One analyst, requesting to remain anonymous, says much of this speculation centres on Vodacom's intent to acquire an Internet service provider (ISP).

"When Vodacom announced it was looking for an ISP acquisition, speculation rose that DataPro could be a target. However, at the end of June, rumours suggested the discussions had broken down. Now that a cautionary is out again, the market is wondering whether these talks are back on again," he explains.

Between mid-April and end-June, DataPro's share price rose 115% to R3.55. The company's share price has since dropped to lows of R2.40.

However, yesterday's announcement saw the company gain 4% despite volatility in the general market.

Although a possible transaction with Vodacom leads the market's speculation around the DataPro cautionary, the analyst notes there could be other options.

"DataPro subsidiary Orion Telecom's is one of MTN's largest service providers and the cellular company is believed to be keen on growing interest in this area. So I don't think we should exclude MTN from a potential acquirer point of view," he says.

Additionally, DataPro could be looking to buy again, he notes.

"DataPro has had a strong buying spree and could be in discussions with another target. Perhaps even new-listed [Telepassport owner] Huge Group, although I personally doubt that is the case."

Huge Group yesterday issued a cautionary saying it had entered negotiations that could have a material effect on its share price. However, group FD James Herbst previously said the company was listing to build capital to facilitate its acquisitive strategy.