Johannesburg, 05 Jun 2008
Powerline communication (PLC) company Goal Technology Solutions (GTS) seeks an 80% equity partner to accelerate its push into the local market, and is looking to conclude a deal at the end of this month.
The company, formed in September 2004, is part of the international Mikcor Group, led by the late "father of African telecoms", Miko Rwayitare, until his death in September.
Rwayitare was the majority shareholder and chairman of GTS - a position he held for about two-and-a-half years, says GTS CEO Adrian Maguire.
He explains that the company is looking to sell the Rwandan-South African telecommunications oligarch's stake to a major player, and is in negotiations with several potential buyers.
One of the companies involved in talks is SA's fixed-line operator Telkom. According to a draft shareholders' agreement in ITWeb's possession, should GTS be swallowed up by Telkom, the latter would have power to appoint a CEO, CTO, CFO and board chairman.
However, Maguire stresses that nothing has been finalised and would not be drawn on details of the potential sale at this stage.
"We're in negotiations with Telkom and others, and the shareholders' agreement forms part of the talks. We are looking at concluding a deal at the end of June."
Despite seeking a majority partner, Maguire believes the GTS brand is well entrenched in the local market and so the company's identity would remain unchanged.
"We would like to foster inroads into the local industry and the best way to do that would be to take on a major telecommunications player as a partner. We have a lot of momentum going and the company is doing very well," he adds.
Maguire says GTS's strategy of going after municipal and gated-community contracts has paid off. In the last six months, he says, the company's network has expanded by 500% and its customer base has surged by 300%. However, Maguire would not give exact numbers, citing the company's current "sensitive position".
Hefty price tag
Market speculation is that the final selling price could be quite high, as GTS is understood to owe a substantial amount of money to Rwayitare's family.
Frost & Sullivan ICT analyst Lindsey Mc Donald believes Telkom's move on GTS makes sense under the current circumstances and it would be a good acquisition for the fixed-line incumbent.
"With Mvelaphanda looking at Telkom [on condition that it divests from Vodacom] and Vodafone seeking to take a bigger chunk of Vodacom, it is likely that Telkom is hedging against losing its mobile interests.
"The key result would be for Telkom to refocus on being a good fixed-line operator, especially with the 2010 World Cup on the way. It costs time and money to expand a network, so it makes sense to buy a company with its own infrastructure," she says.
"It is a strategic and competitive move. Powerlines are an alternative to copper cable (which is susceptible to theft), as well as an alternative to fibre. It is not a bad move to look at different solutions."
Mc Donald feels Telkom also needs to recognise different types of clients and realign itself to focus on consumer clients' needs, instead of mainly going after corporate business.
"They must be looking at alternatives, especially as Neotel is rolling out its fibre optic network and is becoming increasing competitive."
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