Altech has sold its 8.6% stake in East African Liquid Telecommunications for $55 million, in a move that will boost parent company Altron's earnings.
Altech bought into Liquid about a year ago for $50 million, when it swapped its troubled East African stake for equity in Liquid Telecommunications, which focuses on developing markets. It has now sold its stake to Econet, and explains the asset is no longer core to its business.
Altron says the sale of its Liquid stake follows its 2013 purchase of minority Altech shareholders in a R1.8 billion deal. It says, post the creation of the Altron Telecommunications, Multi-media and Information Technology division, both boards no longer see the asset as core.
Cash from the deal will be used to pay down Altron's net debt position, it says in a statement to shareholders. At half-year - its latest set of results - the group had net borrowings of R3.3 billion, which had grown from R1.3 billion in 2012, mostly due to its purchase of Altech stock.
Altron will receive R588 million in total for its stake, which translates into a R134 million profit before tax. It says this will not affect headline earnings, although earnings per share are expected to be boosted 45% by the transaction.
When Altech bought into Liquid, it said combining Liquid and Altech East Africa's networks would "create the African continent's largest single terrestrial fibre network, connecting more African countries than any other single terrestrial network".
Its stake was purchased through a cash amount of $16.5 million and the swap of its assets, which had been bleeding and dragging down Altech's profitability for some time.
Liquid provides international, voice, Internet and data traffic services, as well as fibre, satellite and international carrier services, to fixed and mobile telecoms operators, Internet service providers and enterprises in developing countries.
The company operates and owns one of Africa's most extensive fibre-optic networks spanning more than 13 000km, providing services to customers in Kenya, Uganda, Rwanda, Zambia, Zimbabwe, Botswana, Democratic Republic of Congo, Lesotho and SA.
Altron CEO Robert Venter has said, despite Altech's exit from Africa, the group has not given up on the continent, but is now following an organic strategy and that both Altech and Bytes will follow clients into the continent.
Altron will continue to "explore areas of common commercial interest and co-operation with the Econet/Liquid group in Africa", it says.
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