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22 May 2014

TELKOM MAKES A CASH OFFER FOR BUSINESS CONNEXION GROUP’S (BCX’s) ENTIRE SHARE CAPITAL

Telkom SA SOC (Telkom), South Africa’s listed full service ICT provider, today announced that it has made an offer by entering into an agreement with Business Connexion Group (BCX) in terms of which Telkom will acquire 100% of BCX.
 
BCX is a listed company and a leading player in the South African ICT services market, with strong capabilities in Managed IT Infrastructure, including Data Centres and Application Development.
 
In terms of the offer Telkom will acquire, for cash, 100% of the BCX share capital by means of a Scheme of Arrangement at a price per share of R6.60, representing a total cash consideration to BCX shareholders of approximately R2.7bn.
 
The offer is fully financed and represents a premium of 22% to the volume weighted average share price of R5.38 for the 60 trading days prior to BCX’s cautionary announcement on 15 April 2014.
 
Telkom intends to strengthen and seek growth opportunities for its South African operations and to support expansion of BCX’s current footprint on the African continent.
 
Commenting on the offer, Telkom Group CEO Mr Sipho Maseko said Telkom believes that this acquisition will create an ICT company which will address the technology and communication needs of South African businesses nationally.
 
“A key consideration of our strategy is to grow beyond our core business of connectivity and expand into end-to-end ICT services.This will form part of the strategy to improve performance and restore profitability,” said Maseko.
 
According to BCX CEO, Benjamin Mophatlane, this would be a significant step forward for Business Connexion as part of the company’s own convergence strategy. “It will increase our ability to meet our customers’ needs through integrated end-to-end solutions.”
 
The proposed acquisition is in line with the global trend of IT and Telecoms convergence driving the development of rapidly changing products and services and re-shaping the overall IT and Telecoms business landscape. This convergence trend has seen many traditional IT companies merge with telecommunications companies and is fundamental to the strategies of trailblazing companies such as Google, Apple and Amazon.
 
Telkom believes that its offer represents substantial value to BCX shareholders. Telkom’s offer is fully-funded and a full detailed due diligence was undertaken and completed.
 
It is the Company’s view that the offer is in the best interests of BCX, its stakeholders and the long-term telecommunications interests of South Africa and the African continent. The proposed transaction will enable BCX shareholders to dispose of their shares at a premium to the recent historical traded market price of the shares.
In the event that the schemes are successfully implemented, BCX will become a wholly owned subsidiary of Telkom and its listing on the JSE will be terminated

For further enquiries, please contact:

Pynee Chetty

Senior Specialist: Media Relations

Group Communication

Tel:+27 12 642 1716

Mobile: +27 81 389 7874

Email: chettpr2@telkom.co.za

 OR

Leigh-Ann Francis

Specialist: Media Relations

Group Communication

Tel: +27 12 642 1728

Mobile: +27 81 391 4780

Email: francilm@telkom.co.za

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ABOUT TELKOM:

Telkom is a leading communications services provider in South Africa. We had consolidated operating revenue of R16.8 billion and normalised profit after tax of R1, 683 million for the period ended 30 September 2015. Total assets amounted to R41.9 billion and equity attributable to the owners of Telkom to R23.5 billion as of 30 September 2015. The group generated normalised free cash flow of R1.4 billion for the period ended 30 September 2015.

As of 30 September 2015, we had approximately 3.3 million telephone access lines in service and 1,030,441 ports connected via MSAN access. We offer business, residential and payphone customers a wide range of services and products, including:

  • fixed-line retail voice services using PSTN (Public Switched Telephone Network) lines, including ISDN (Integrated Services Digital Network) lines, and the sale of subscription based value-added voice services and calling plans;
  • fixed-line customer premises equipment rental and sales services both voice and data needs and these include PABX, Computers, Routers, Modems, Telephone handsets and other ancillary equipment;
  • interconnection services, including terminating and transiting traffic from South African mobile operators, as well as from international operators and transiting traffic from mobile to international destinations;
  • fixed-line data services, including domestic and international data transmission services, such as point-to-point leased lines, ADSL (Asymmetrical Digital Subscriber Line) services, packet-based services, managed data networking services and internet access and related information technology services;
  • Data Centre Operations includes e-commerce, application service provider, hosting, data storage, e-mail and security services;
  • W-CDMA (Wideband Code Division Multiple Access), a 3G next generation network, including fixed voice services, data services and nomadic voice services;
  • mobile communication services, including voice services, data services and handset sales through our mobile navbar-brand called Telkom Mobile;
  •  information and communication services including cloud services, infrastructure services, workspace services, global service integration management and hardware and network equipment sales locally, in seven African countries, the UK and Dubai through Business Connexion Group; and
  • other services including directory services, through Trudon (Pty) Ltd, wireless data services, through Swiftnet (Pty) Ltd.

Convergence is one of our key strategic initiatives in building a sustainable future for Telkom.  We will lead the provision of converged services in South Africa in support of our mission statement: Seamlessly connecting people to a better life.