DataPro Group announces intention to acquire Orion Telecom in R380m deal

DataPro Group, a leading supplier of voice, data and Internet services in South Africa, has announced its intention to acquire Orion Telecom in a R380 million deal that will significantly increase the scale, strategic position and market share of the combined group.

The proposed transaction is subject to conditions precedent usually associated with a transaction of this nature, including all necessary regulatory and shareholder approvals and is expected to close in early 2007.

Orion Telecom is a leading supplier of voice services such as least-cost routing (LCR) to South Africa's corporate and government sector.

DataPro Group is a fast growing, independent, telecommunications service provider, providing voice and data services to both consumers and corporate businesses, mainly in southern Africa.

DataPro Group competes primarily through its wholly owned subsidiaries, namely DataPro (Pty) Ltd, a corporate ISP, VoxTelecom, the specialist voice division and @lantic Internet Services, an ISP focused on the consumer market.

The proposed transaction is in line with the DataPro Group's vision to be the leading independent alternative supplier of voice and data services in South Africa.

DataPro Group is a significant player in the consolidation of the ISP and voice industry, and has advanced its growth both organically and through strategic acquisitions over the last two years.

"Orion pioneered the delivery of LCR solutions and have always been market leaders in this segment," says Group CEO Douglas Reed. "They serve 60% of the top 200 listed companies on the JSE and have significant government contracts, including four provincial governments. The acquisition is synergistic and offers great opportunities both to DataPro Group and to Orion. They're a profitable, well run, cash-generating business."

Executive Director Tony van Marken adds that the acquisition creates a group with balanced strength in providing both voice and data services. "Orion has historically been a leader in the voice segment of the market and will significantly enhance the profile of our voice business. They bring an outstanding customer base at the high end of the market, supported by a strong account management capability. As a leader in the data market, we are now able to offer a comprehensive portfolio of voice and data services to existing Orion customers."

CEO Douglas Reed says the acquisition was a logical step in DataPro's strategy to become South Africa's premier alternative to incumbent telecommunications providers such as Telkom.

"We have invested a lot of our resources into our technical platform and skill set in preparation for this short window of opportunity. The market is poised for exponential growth in the next few years and it is imperative that we get as much market share as possible to compound that growth."

"There's going to be a lot of industry consolidation in the next couple of years and we would rather be a leader than a laggard," adds Van Marken. "The market is dominated by well-funded incumbents who have been given some form of monopolistic or regulatory advantage and who manage large bureaucratic businesses. DataPro Group prides itself on its strategic agility and responsiveness to customer needs. We are well positioned to take advantage of the further liberalisation of the South African marketplace and believe we can significantly increase our market share through organic and acquisitive growth."

Apart from increased revenues through cross-selling opportunities, Van Marken says the acquisition will also enable DataPro to reduce costs by leveraging its network assets and accessing bigger trade discounts. He says DataPro plans to keep Orion's existing operation, brand and management team intact.