A Stock Exchange News Service release announced today that the Econet Wireless Group has paid Altech US$87.5 million (R565.25 million) for its 50% stake in the joint venture company Econet Wireless Global. Altech originally paid $70 million for the stake.
The announcement says in terms of the settlement agreement, effective from 1 September, all disputes and claims between the two parties have been settled.
According to the settlement agreement, Econet was only required to provide a bank guarantee yesterday and make final payment by the end of October.
Econet CEO Strive Masiyiwa says the group decided to make full payment in advance to enable the business to resume normal function. It would also allow the company to begin implementing its expansion programme. He says the group will also continue with the arbitration process in Nigeria to increase its stake in Vee Mobile, formerly known as Econet Wireless Nigeria.
An early settlement also enables Econet to reconstitute its board of directors.
"Now that we have paid Altech, their directors on our board have also resigned and we can now replace them which is important for our corporate governance," Masiyiwa says.
In a previous media statement, Altech CEO Craig Venter said it was the company`s plan from the beginning of the joint venture with Econet to "elevate itself up the value chain into high growth areas of cellular activities".
The finalisation of the settlement means it`s back to the drawing board for Altech, says CFO Peter Curle.
Curle says Altech will pursue its existing acquisition and investment strategy, which could include developing interests in mobile network operating activities in Africa and elsewhere. He says Altech did not pursue developing cellular networks in Africa or around the world during the period Altech had owned its EWG stake.
"But we were always looking for opportunities. We don`t have any specific plans in mind, but we are constantly analysing and assessing things. It is essentially back to the drawing board for us," he says.
A JSE analyst says Altech has had cellular network operator ambitions for some time. He says while the unwinding of the EWG deal could be seen as a setback to these plans, Altech is now better positioned for a new foray.
"It made a sweet profit on the EWG deal and this will just whet the appetite to explore more opportunities to get into the cellular game in a bigger way," he says.
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