JSE-listed Allied Technologies (Altech) is to sell its 40% stake in Alcatel Altech Telecoms (AAT) to French telecommunications company Alcatel, which AAT represents locally. If the deal closed in a month or two as expected, Alcatel will own 80% of AAT.
A put option in the shareholder agreement between the companies allows Altech to sell its stake in the joint venture under certain circumstances. Under the agreement the selling price is in the region of R40 million multiplied by the price-to-earnings ratios of similar companies in the local market. The final amount is to be determined by merchant banks, but Altech CEO Craig Venter says it should be close to R300 million.
The remaining 20% of the company is held by empowerment group Rethabile and is not expected to be affected.
The sale will bring to an end a nine-year partnership between Altech and Alcatel, but Altech says future dealings between the companies have not been compromised.
Venter characterises the deal as a positive step for Altech that will allow it to dispose of a business expected to do poorly in the near future and to put the realised cash to work elsewhere. AAT recently lost out on big contracts with Transtel and Eskom Enterprises for work on the second national operator`s network and on the Cell C tender.
"Forecasts for the next year or two certainly weighed on the decision making process," Venter says.
Altech says its wholly owned subsidiaries not only bring in the bulk of its business but allows it to continue in its globalisation plans. AAT was effectively restricted to operating in the South African Customs Union, made up of SA, Lesotho, Namibia, Swaziland and Botswana.
The sale of ATT comes with its own set of restrictions, however. Under the deal Altech and its parent Altron group will be restricted from competing with AAT on infrastructure supply for five years. That restriction only applies in the Customs Union countries, and does not affect telecommunications services.
In 2001 AAT was responsible for 18.8% of total Altech revenues, down from more than 50% in 1999. Venter says the percentage for 2002 would have been "a lot less".
Altech is to use the cash for acquisitions in the telecommunications and multimedia fields in the near future, most probably in Australasia and Brittain. "We are in the advanced stages of quite a number of opportunities," Venter says. In the meanwhile other businesses in the Altron group could also find themselves being sold. "We will look at each business, with no emotional ties, no sacred cows, and if it makes sense to move on we will move," he says.
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