Allied Technologies` (Altech`s) cellphone subsidiary, Autopage Holdings, is to acquire the contract cellphone businesses of Radiospoor Cellular, as well as Cellcom`s stake in Autopage Cellular, in deals worth a about R260 million.
"The deal has more than doubled Autopage Cellular`s contract subscriber base and now equates to nearly 14% of the country`s 1.5 million cellular base, compared to approximately 6% prior to the acquisition," says Autopage chairman Craig Venter.
He adds that the deal has positioned the company as SA`s third-largest cellular service provider.
The Radiospoor cellular business comprises the cellular contract subscription businesses of Radiospoor and Cellular Operations, trading as Supercall. The purchase price of Radiospoor was R218 million, while R38 million was set aside for the 24.95% of Autopage Cellular held by Cellcom.
Cellcom, an independent cellular service provider operating in the UK, France and Monaco, has been a shareholder and business and technology partner in Autopage Cellular since 1994.
Autopage says the acquisition of Cellcom`s interest in Autopage Cellular will enhance Autopage`s earnings base and allow management to fund and operate it "on an optimal basis".
"South Africa has experienced ongoing consolidation of service providers to avoid marginalisation as the market becomes increasingly sophisticated," says Venter.
"This acquisition will ensure additional value-added offerings to subscribers and will achieve economies of scale for Autopage Cellular with both MTN and Vodacom."
Other factors, such as "positive positioning in preparation for the third cellular network as well as economies of scale in servicing and reducing the costs of servicing subscribers effectively, also influenced the acquisition", Venter adds.
The Radiospoor and Supercall acquisition will be funded via an issue of Autopage ordinary shares to be implemented by way of a clawback offer to existing shareholders.
The Cellcom acquisition is also to be funded through a share issue and clawback offer.
Radiospoor says it has granted Autopage a non-exclusive right to use the Radiospoor trademark for nine months from the day after the fulfilment of the conditions precedent.
It said at the announcement of its interim results in February that the contract cellular business had lower growth prospects than the prepaid cellular business, and it intended to consolidate its position in this market.
"A large subscriber base is considered vital to ensuring continued profitable growth in the contract cellular market. To achieve this bulk, Radiospoor considered acquiring or merging with other customer bases and if this could not be done, selling the contract cellular customer base," it says.
"The directors believe that to maintain the status quo would, in the long term, be the least profitable option. After discussions with many other industry players, the directors are of the opinion that the sale of the contract cellular business to Autopage is financially and strategically the best option."
Most of the cash for the disposal will be returned to shareholders, it adds.
In a separate development, Venter, who is also CE of Altech, said on Moneyweb`s Business Today, broadcast on radio station 702, that Altech had not been buying up shares in USKO.
There has been speculation for some time that Altech has been interested in buying USKO, whose shares rose 19% on Monday on high volumes.
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