Least-cost routing company TeleMasters wants to de-list from the JSE's Alternative Exchange, after three-and-a-half years, because it doesn't need to raise capital, and its shares are thinly traded.
Majority shareholder, founder and CEO Mario Pretorius' family-controlled trust, the Maison d'Obsession Trust, will buy out shareholders holding15% of the company's shares, at a price that has yet to be determined.
TeleMasters listed on the JSE's Alt-X bourse on 12 March 2007, under the code TLM. Its shares opened at R1.62 and shot up before closing at R2.60. However, its share value has since declined and stock is now trading at about R1.49, valuing its market capitalisation at R62.6 million.
The delisting will have to be approved by shareholders, which will then see minority shareholders receiving an offer for their stake. Pretorius, and any “parties associated” with him, will not be able to vote at the meeting.
Not worth it
TeleMasters' proposed delisting makes it the second IT company to leave the JSE recently, after Dynamic Technology Holdings' (DTH) shares traded for the last time in September. DTH left the bourse because it was expensive to maintain a listing, and its shares were not well-traded.
TeleMasters operates in the least-cost routing (LCR) sector and competes against companies such as the Huge Group, Vox's Orion subsidiary, Nashua Mobile and Altech Autopage. The sector has been under strain recently, after mobile operators voluntarily cut interconnect rates to 89c from R1.25c in March.
regulations that will see mobile termination rates drop to 40c from March 2013. LCR operators make money by routing fixed-to-mobile calls through the mobile networks, which saves companies costs.
However, margins have come under pressure after interconnect rates dropped, and future rate cuts mean the model is no longer viable. Companies such as Orion, Nashua Mobile and Altech Autopage are migrating their LCR base to IP-based networks that offer higher margins.
TeleMasters reported revenue up for the nine months to June, with turnover growing from R170 million to R174.7 million. However, net profit almost halved and was reported at R5 million, down from R9.9 million in the previous corresponding period, as lower interconnect rates directly impacted profit.
Pretorius was not immediately available to comment this morning. It is not known whether he will make a profit on his initial investment.
Related story:
Interconnect hits TeleMasters
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