Telemasters has announced its second acquisition this week, this time of wireless application service provider (WASP) Marketel.
The acquisition, through a combination of cash and shares, looks likely to be the last for a while as the company has now withdrawn its cautionary.
Marketel – which holds a VANS license and is a dominant player in the WASP market – is one of South Africa's longest running WASPs and has a strong track record, including being Vodacom’s longest standing and Cell C’s largest WASP.
The deal sees TeleMasters securing a three-year profit warranted of R6m profit, after tax, per annum from Marketel, while 11,562,600 shares are to be issued to Marketel vendors.
Together with the Motion Telecommunication deal announced on Monday, the acquisition will increase the scope of TeleMasters' telecoms based offering and is another sign of the robust health of the largely debt-free telecoms player.
Marketel's communication and GSM services significantly augment TeleMasters' Business Communication Strategy offering and the acquisition forms a important part of TeleMasters' intent to diversify the scope of its business and its offering to clients.
The Marketel acquisition will raise TeleMasters' headline profit per share by 17,85% and will increase net tangible asset value per share by 2,.71%.
“The current market conditions for mergers and acquisitions is not ideal, but it also presents interesting opportunities for a company like TeleMasters, which has positive cash flow and extremely low debt levels,” says Mario Pretorius, TeleMasters CEO. “We are able to act more swiftly than most to take advantage of conditions, while having a 40% dividend policy makes TeleMasters shares an attractive proposition for investors.”
TeleMasters features a track record of impressive organic growth, strong cash generation and dividend payment. The company's future acquisitions will be structured around avenues to increase public shareholding, and will also target BEE investment opportunities. At a broader level, the company is focusing on improving the overall efficiency of its clients’ communication and data services.