Gateway acquires Link Africa

Johannesburg, 26 Apr 2005

Gateway Communications has signed a $50 million deal to acquire Link Africa, a pan-African satellite service provider, from Celtel International.

Link Africa is one of Africa`s largest international service providers, delivering services in more than 15 African countries and switching around 7.5% of the international telephone traffic for Sub-Saharan Africa.

Gateway claims the acquisition will create the largest African-focused service provider on the continent, delivering a range of connectivity services across more than 25 African nations.

According to Gateway MD Mike van den Bergh, the acquisition increases the company`s critical mass, as it is already the largest player in sub-Saharan Africa, and is now effectively acquiring the second largest operation.

"As we use voice over IP to carry all our traffic, this will also help us to reduce the cost of services for local service providers seeking to take traffic into Africa," says Van den Bergh.

"It also improves our physical network capability, as we now have a satellite earth station - based in Belgium - which offers satellite coverage of the whole of the continent."

He says the acquisition will also improve Gateway`s presence in French-speaking Africa, which traditionally wasn`t that strong, but will be boosted by Link Africa`s strong presence in a number of those countries.

The company intends to combine its applications expertise with Link Africa`s infrastructure and engineering capabilities to create a combined team with the expertise and experience to service the African market.

According to Van den Bergh, the company also plans to maintain a strategic partnership with Celtel and will continue to deliver services across the Celtel group, which has more than six million customers in 13 countries.

"Gateway is committed to improving connectivity in the African continent and supporting the roll-out of wireless services in historically underserved markets, therefore it is important for us to build a strategic relationship with Celtel, which is one of the fasting growing mobile operators."

A flogging

In other news about Celtel, a JSE analyst has suggested that MTN is "flogging a dead horse" in regards to its continued action opposing Kuwaiti firm MTC`s recent $3.4 billion acquisition of the Celtel group.

MTN has applied to English courts for access to documents from Celtel International, following MTC`s purchase of Celtel from under the noses of the South African operator.

"What concerns me is that the market in the form of MTC has shown that it is prepared to pay $3.4 billion for Celtel. While MTN`s $2.7 billion is probably fair value and the MTC offer is fairly rich, the fact is that MTN`s shareholders will not be impressed over a bidding war," says the analyst.

Van den Bergh is hopeful that MTC`s acquisition of Celtel will, in the long-term, open up the possibility of the company moving into the Middle Eastern market.

"In the broader relationship with MTC, there is obviously a possibility that in the future we may be able to leverage off our relationship with Celtel to move into the market north of Africa," he says.