Econet Forms Network Joint Venture

South Africa's Altech and the Econet Wireless Group, an international company with global telecommunications interests in Africa, the United Kingdom and the Asia Pacific region say that they are joining forces to establish a new South African-based telecommunications company initially valued at approximately R1 Billion. (US$140 million).

The newly formed 50-50 joint venture between Altech and TSMI, (TSMI being the international investment company of the Masiyiwa family and the founders of the operations comprising the Econet Wireless Group), will ultimately take ownership and jointly control all current Econet Group assets, including operations in New Zealand, the UK, Lesotho, Botswana, Kenya, Zimbabwe and Nigeria.

The new company, (Newco), will have a Board chaired by Altech and a management team led by Econet Wireless, together with Altech.

The CEO of Altech, Craig Venter, said the Econet group had been identified as a compatible partner about two years ago and that he was delighted that agreement had finally been reached in a deal which would thrust the Altech group into being a true global player. "I have stated in the past that in order for Altech to continue to grow significantly, it would have to globalise," said Venter. "This venture is a perfect fit within our TMT and globalisation strategy as Econet is an ideal entry point for Altech into mobile network operations with its base of high-growth operations in Africa, and several exciting initiatives in other parts of the globe."

The CEO of the Econet Wireless Group, Strive Masiyiwa, also expressed his enthusiasm and satisfaction with the venture, saying it would pave the way for the group's further expansion into the lucrative African market and internationally. "The investment by Altech will strengthen Econet's capital base and will enable us to develop existing operations and to raise our shareholdings in certain existing operations to a controlling stake," he said.

Masiyiwa said the venture also positioned the Group well to attract additional funding for future expansion at a time when there had been a dramatic turnaround in the global telecom sector. "In partnership with Altech we will have the means to match our determination to be a long-term influential player in the African, indeed global, cellular market,"

Both Altech and the Econet Wireless Group have agreed that Econet will continue to assess various opportunities in Africa and elsewhere. Additional funding for these opportunities, plus for Econet to enhance its ownership position in certain of its network operations, will be on a basis to be negotiated between Altech and TSMI.

Masiyiwa confirmed that initially Newco would not include the Zimbabwe Stock Exchange-listed Econet Wireless Holdings or its subsidiaries and international interests. "Those interests will be incorporated into the joint venture company when political, regulatory and economic conditions permit. This includes the ability to repatriate funds." Masiyiwa also confirmed that the joint venture did not affect the structure of Econet Wireless Limited which currently holds five percent interest in Econet Wireless Nigeria.

Subject to conditions, Altech will subscribe for shares in Newco representing 50 percent of the entire issued share capital of Newco, for a cash consideration of US$70 million. TSMI will subscribe for the balance of the issued share capital of Newco, with the consideration being settled by the injection of selected assets of Econet, valued at US$70 million."

Posted to the site on 22nd January 2004