SECOND time lucky. With this in mind, Telecom Namibia and Leo tonight sign a new take-over agreement, hoping this time around it will receive the blessing of the Communications Regulatory Authority of Namibia (Cran).
Telecom Namibia’s nearly year-long struggle to acquire the country’s second mobile operator has included a legal battle with Cran, while Powercom, the holding company of Leo, suffers losses of between N$2 million and N$5 million a month.
The parties will sign on the dotted line tonight, Telecom Namibia managing director Frans Ndoroma confirmed to The Namibian yesterday.
Cran, however, will still have the final say. The watchdog’s chief executive, Stanley Shanapinda, told The Namibian that the law allows for Telecom Namibia and Guinea Fowl Investments (GFI), the joint venture between Investec Bank and Nedbank which bought Powercom, to sign the take-over documents even though Cran still has to approve the new agreement.
Cran approved the original transaction in June, provided that private investors are allowed to buy at least 25% of Telecom Namibia. For this to happen, the Post and Telecommunications Establishment Act will have to be changed.
GFI then successfully brought an urgent application against Cran’s ruling in the High Court. The High Court ruled that Cran’s conditions were unauthorised and invalid, and ordered the watchdog to reconsider the conditions by October 19.
Cran’s board sought legal advice and even though it was found that Cran had “reasonable prospects on success on appeal”, the regulator decided to “avoid protracted litigation on the matter”.
“The board took a purposive and holistic approach to move the industry forward,” a board decision of October 11 stated. “The Authority [Cran] is empowered to take other measures to ensure a fair landscape in terms of the spirit of the [Communications] Act, which the Authority will continue to implement,” the decision stated.
As the original agreement between Telecom Namibia and GFI lapsed on June 30, Cran instructed the parties to submit a new one. Shanapinda yesterday said a new agreement has been submitted and that Cran is “looking at it”.
Ndoroma wouldn’t comment on the details of the new transaction, saying all will be revealed when the parties sign the deal in the Kalahari Sands Hotel’s top-floor Moringa Room tonight at 17:30.
In terms of the original agreement, Telecom Namibia had to pick up the N$240-million tab for Leo’s mounting debt and give GFI N$96,5 million worth of shares in Powercom. The nominal cash price that Telecom Namibia had to pay for Leo was N$2.