The Econet Wireless Group confirms it is making a play for Eskom's share in Telecom Lesotho, as the South African power utility continues to pull out of non-core assets.
Econet and Eskom Enterprises hold 70% of Telecom Lesotho, through joint venture company Mountain Kingdom Communications, which was established in 2000. The Lesotho government holds the remaining 30%.
"Econet has accepted the offer from Eskom to buy it out of the joint venture and amicable negotiations are in progress," says Econet spokesman Sure Kamhunga. He adds that valuations are in progress, based on the formulas that are in the shareholders' agreement.
In terms of the shareholders' agreement, Econet has pre-emptive rights to Eskom's shares in Mountain Kingdom Communications, of which Eskom holds 71%.
"Econet is happy to continue with the business, and will continue to develop it alongside the Lesotho government... Econet has a lot of confidence in Lesotho and the way it is being governed," states Kamhunga.
Telecom Lesotho has 60 000 mobile subscribers through cellular division Econet Ezi-Cel Lesotho. Kamhunga would not be drawn on details of expected subscriber growth or future capital expenditure.
Eskom expansion
He would also not comment on the profitability of the company, only saying: "Working together, Econet and Eskom have transformed what was a loss-making state-owned enterprise into an efficient, profitable business. They have expanded the size of the business and also built a GSM cellular business from scratch."
Meanwhile, Eskom spokesman Fani Zulu denies claims that Eskom is selling off the assets to fund its R97 billion expansion programme that will increase its electricity generation, distribution and transmission capacity in SA.
"The decision was made that Eskom has to focus on its core business, and is thus exiting the Lesotho telecoms business. But there is no pressure to exit, as Eskom is a profitable business that has sufficient cash flow," says Zulu.
He points out that Eskom's 15% shareholding in Neotel would also be shed in due course. "We will exit at the right time, for the right value."
It is unclear, at this stage, when the negotiations between Eskom and Econet will be concluded, or what the potential value of the Mountain Kingdom Communications stake could be.
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