South Africa's Altech Group has ended direct management of its loss-making East Africa arm by selling its ownership stake in various operations to Liquid Telecom Group.
Altech will in turn receive an initial 8.6 percent stake in Liquid Telecom Group with shareholder voting rights and $16.5 million in cash. The deal makes Liquid Telecom the owner of Africa's largest single fiber network with operations in Kenya, Uganda, Rwanda, Zambia, Zimbabwe, Botswana, DRC, Lesotho and South Africa.
"Liquid has been building and investing in a high-quality, pan-African fiber network for many years, and this deal will accelerate our progress by enlarging our network footprint and complementing our existing product portfolio," said Nic Rudnick, CEO of Liquid Telecom.
Liquid Telecom started as a satellite services provider in Southern Africa and has been able to acquire fiber-optic licenses in coastal and landlocked countries. Liquid Telecom has headquarters in Mauritius and is owned by the Econet Wireless Group.
"The Liquid transaction opens a positive new chapter for Altech in partnership with a group with proven expertise in its sector," said Craig Venter, Altech Group CEO.
This network will provide reliable, high-speed, cost-effective connectivity to carriers, ISPs (Internet service providers), homes, financial institutions and businesses of all sizes, the companies said.
The deal stipulates that Liquid Telecom will take ownership of a 61 percent stake in Kenya Data Networks, a data carrier and infrastructure provider in Kenya; Realtime, a service provider in Zambia; Africa Data Networks, an operator in the Democratic Republic of Congo (DRC); Swift Global, a provider of voice, data and mobility solutions in Kenya, Uganda and Rwanda; Stream, a service provider in Rwanda; and InfoCom, an ISP in Uganda.
Altech becomes the latest South African firm to fail in its efforts to run operations in East Africa. Since taking over operations in other countries five years ago, Altech faced challenges of cultural and managerial style differences between local staff and South African expatriates. Other South African companies facing similar issues recently have included Dealfish, Kalahari and Mcality.
The deal has to be approved by regulators in the DRC, Kenya, Rwanda, Uganda and Zambia.