The JSE will get its first new listing worth R2bn this year, when Galela Telecommunications, owner of iBurst, is reverse listed into S&J Land Holdings in June.
S&J Land Holdings is a shell with only R12,8m cash. The terms of the deal will be announced only after auditor, Ernst & Young, has completed its audit but the new company will have two major assets: 86% of iBurst Africa and 28,7% of iBurst SA.
To ensure reasonable liquidity, a private placement of shares will be part of the listing. S&J's board will step down and the company will be renamed, either as Galela or iBurst. S&J's shares will remain suspended until the circular with audited numbers is published, probably in mid May or early June.
Thami Mtshali (pictured) is the founder and currently 100% owner of Galela. The two major assets are iBurst Africa and iBurst SA.
iBurst represents the only asset and source of profits but this is not a complete listing of iBurst. It is more accurately described as the listing of the shares of founder Mtshali. Galela has 80% of iBurst Africa and 28% of iBurst SA.
He told Moneyweb that he started the company when he realised that his contract to run ITC for the Lotto was due to run out some five years ago. He sought a new technology approach superior to the 3G offering of the three cellphone companies and found it in Silicon Valley, California - IEEE standard 802.11.
iBurst claims its broadband offering is faster and less subject to interruption than those of its rivals. It says it offers the speed of DSL in a mobile environment. Its interference reduction technology gives users faster, more stable service.
It is portable and can be used across a wide area with a single base station. Its handover capabilities enable users to move freely between base stations. It is based on an Internet Provider base for simplicity, allowing a network to be established quickly and cheaply.
Danie van Huyssteen of Questco said iBurst Africa had bee going for just over a year but it had the greater potential. This company is active in Ghana, Kenya, Mozambique, Zambia, Namibia, the DRC and Uganda.
Mtshali told Moneyweb that iBurst has 250 base stations in SA and some 200 in Africa. He said there were 10 000 users in Ghana and 1 000 in the DRC.
I put it to Mtshali that investors will be buying shares in shares - like an investment trust and asked if it would not trade at a discount. He said iBurst Africa was full of potential and people could participate only through Galela/iBurst. The company does not need the listing for capital, though some capital will be raised. That will be used to expand in Africa.
"It's a pay-as-you-go system. Our remuneration is based on megabits a second. It's a bit like selling water. It just flows at the rate of 4mb/sec in Ghana and 2mb/sec in the DRC ad our margin is something like 50%.
Blue Label Telecommunications (JSE:BLU), Vodacom, Eric Ellerine, the PIC and Investec are shareholders in the SA operation. I asked Mtshali if the partners in iBurst SA might swop their shares for shares in Galela. He said they would be approached one by one.
The listing is subject to all the usual conditions - approval by shareholders, the JSE and due diligence investigations.
Write to David Carte: davidcarte@moneyweb.co.za
This story was first published on Moneyweb at:
http://www.moneyweb.co.za/mw/view/mw/en/page39?oid=285641&sn=Detail
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