Altech/Liquid deal review: The making of monopoly

South African ICT company Altech this week announced it has disposed of its 60.8 percent stake in Kenya’s largest private data carrier Kenya Data Networks (KDN) in return for an 8.6 percent shareholding in Econet Wireless-owned ISP company Liquid Telecom, 10 percent voting rights and US$16.5 million in cash.

According to the agreement, Altech also sold Africa Data Networks, an operator in the DRC, Swift Global, a provider of voice, data, mobility, business, enterprise and government solutions in Kenya, Uganda and Rwanda, Stream, a service provider in Rwanda and InfoCom, an ISP in Uganda.

Bonnie Mwambia, ICT consultant at Oneclick Solutions, called the deal a “very interesting sale”, as it appears to involve “juggling shares and consolidating companies”.

“They sold all their companies in East Africa (KDN, SwiftKenya and infocom) to Liquid Telecom. In fact it’s like they bought shares in Liquid Telecom and then paid using the companies,” he says.

Looking at the arrangement more closely, it seems Altech has offloaded the shares of a giant struggling company to another giant company, to form a giant company that owns the single largest network in the region.

Following the deal, Altech extended its control of the sector from five countries to eight, namely Kenya, Zambia, Uganda, South Africa, Lesotho, Botswana, Uganda, DRC and Rwanda.

While discussing the deal, Liquid boss Nic Rudnick said that it would enlarge the company’s “network footprint”.

“This deal will accelerate our progress by enlarging our network footprint and complementing our existing product portfolio,” Rudnick said.

Many will thus see the deal as an effort by two suffering companies to monopolise the data-carrying sector in the eight countries, with the new company now having more influence and resources, as well as a bigger network.

“We run from northern South Africa through Zimbabwe to Zambia to the Democratic Republic of Congo,” said Rudnick in aninterview in 2012. Early last year, Liquid acquired ZOL ISP to make it the largest data carrier in Zimbabwe. 

Liquid now becomes a major player in East Africa, adding over 13,500 kilometres of its fibre-cable with another 6250 kilometres from the East African cable carrier, making it the largest company in terms of fibre extensions in the region

The new deal continues to raise questions on the intent of Rudnick, who has been seen as a champion fighter against monopolies by governments and telecoms, especially following his Zimbabwe deal that saw his company head towards monopolising the industry.

Posted in: Internet

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