Altech has disposed of its East African operations, contributing them to Liquid Telecommunications Holdings in exchange for shares in Liquid.
Altech will become a strategic minority shareholder in Liquid, holding an initial 8,6% of Liquid’s issued share capital, with shareholder voting rights amounting to 10% and representation on the board of the Liquid group.
Altech will contribute its interests in its East African network assets and will subscribe for the issue of new shares in Liquid for cash.
Liquid’s controlling shareholders have indicated that Altech may be afforded the opportunity to increase its shareholding in Liquid, in the future, in order to enhance the strategic partnership between Liquid and Altech.
Liquid is a supplier of fibre, satellite, international carrier services and infrastructure to fixed and mobile telecommunications operators, internet service providers (ISPs) and enterprises in developing countries – particularly in central and southern Africa.
Liquid operates and owns one of Africa’s most extensive fibre optic networks which provides services to customers in South Africa, Botswana, Lesotho, Zimbabwe, Zambia and the Democratic Republic of Congo (DRC). Operations in a further two countries are under development. It has constructed a substantial fibre optic network across the region which is currently commercially operational.
Liquid has also extended its international network footprint through the use of third party fibre networks, including undersea cable, through Indefeasible Rights of Use (IRUs) and lease option arrangements.
In 2007, Altech formed Altech Stream Rwanda Limited (ASR). In 2008, it acquired controlling shareholdings in the companies now known as Altech Kenya Data Networks Limited (KDN), Altech Swift Global Limited (ASG), and Altech Infocom Limited (Infocom). KDN had earlier established Africa Digital Networks Limited (ADN) in the DRC, currently a wholly-owned subsidiary of KDN.
Collectively, these companies operate as network service providers and ISPs in East and Central Africa.
Altech’s current shareholdings are as follows: KDN (60,8%); ASG (51%); Infocom (51%). ADN and ASR are now held 100% and 90%, respectively, by KDN, which has also acquired a 10% shareholding in the company owning the TEAMS undersea cable operation. Certain of the minority shareholdings in these companies which are currently held by local parties in the countries concerned, will also be acquired by Liquid simultaneously.
In 2009, Altech incorporated Altech Data International Limited (ADI), which is currently owned 60,8% by Altech. ADI acquired IRUs on the Seacom undersea cable for on-sale to KDN and other clients.
Following the transaction, Liquid will own the following percentages in the various companies: KDN (80%); ASG (100%); Infocom (80%); ASR (75%); ADI (100%); ADN (100%). Liquid intends transferring ASG to KDN post the transaction. This places Liquid in a sound position to further develop these businesses.
AEA owns and operates fibre networks, WiMax, Microwave, WiFi and satellite facilities throughout East Africa and in the DRC. AEA also provides ISP services to clients in the countries in which it operates. In 2011, KDN built a co-location data centre in Nairobi, which is the largest facility of its kind in East Africa.
Its rationale for the transaction stems from the fact that Altech operates in the telecommunications, multimedia and information technology (TMT) sector, through a focused range of activities.
Altech believes that its AEA network would benefit considerably from becoming part of a larger, specialist network and ISP operator with more extensive experience in building, maintaining and operating networks in Africa. The combination of Liquid’s southern and central African network facilities with those of AEA in East Africa will create a formidable pan-African entity which will be able to offer communications, access and support services to major international corporate clients, in particular.
The combination of Liquid’s and AEA’s network will create the African continent’s largest single terrestrial fibre network connecting more African countries than any other single terrestrial network. The efficiencies which this will create will be considerable and will enable the interconnectivity of the continent in a manner previously unachievable. Enterprises will, in many cases for the first time, be able to obtain point to point connectivity between a virtually unprecedented number of African countries.