CEC Plc disposes its telco assets for USD32mn to Liquid Telecom

Liquid Telecom Head of Commercial Services
Liquid Telecom Head of Commercial Services - Karl Delport (right) shakes hands with Copperbelt Energy Corporation PLC Chief Finance Officer - Mr. Mutale Mukuka (left) in Lusaka:

The power transmitter realized its 50% stake in the telco making CEC Liquid 100% wholly owned by Liquid Telecom

Lusaka Securities Exchange listed power transmitter in Africa’s second largest copper producer, Zambia, the Copperbelt Energy Corporation Plc (ISIN: ZM0000000136), this week finalized a transaction for the disposal of its 50% stake in telecoms provider CEC Liquid Telecom.  This was for a consideration amount of USD32mn sources close to matter disclosed.

According to stock exchange news extract,  shareholders are referred to the “Divestment – CEC Liquid Telecommunication Limited” announcement issued via the Stock Exchange News Service (“SENS”) on 23rd May 2018 in which Shareholders were advised that Copperbelt Energy Corporation Plc (“CEC” or “the Company”) had entered into a Sale and Purchase Agreement (the “Agreement”) with Liquid Telecommunications Holdings Limited (“Liquid”) for the sale of CEC’s 50% shareholding in CEC Liquid Telecommunication Limited (“CEC Liquid Telecom”) (the “Transaction”).

CEC is pleased to announce that it has completed the sale of its 50% shareholding in CEC Liquid Telecom to Liquid and all the conditions precedent (“CPs”) to which the Transaction was subject have been fulfilled.

a. The approval of the sale of the Sale Shares and matters ancillary thereto by the COMESA Competition Commission;

b. The approval of the sale of the Sale Shares and matters ancillary thereto (including the proposed changes to the board of directors of CEC Liquid Telecom by the Zambia Information and Communications Technology Authority; 

c. CEC Liquid Telecom having obtained the consent of Stanbic Bank Zambia Limited to the sale of the Sale Shares and matters ancillary thereto (including the termination of the Joint Venture Agreement); 

d. Discharge of the CEC Guarantee in a form satisfactory to CEC;

e. Liquid having obtained the consent of its lenders to the acquisition of the Sale Shares and matters ancillary thereto; and

f. CEC having obtained the consent of its lenders to the sale of the Sale Shares and matters ancillary thereto.

Following fulfilment of all the conditions precedent, the Transaction has reached completion, triggering the payment of 10% (circa USD3.2mn) of the agreed purchase price (initial instalment payable at completion). The deferred consideration, backed by a bank guarantee, is payable no later than 28th February 2019.

The realized proceeds from the Transaction will be used to fund the growth and expansion of CEC’s core business in line with its strategy of divesting out of non-core operations and focusing on the core business of generation, transmission, distribution and supply of electricity.

Transaction implications

Implications of this transaction are that reporting lines for the Zambian corporate will be compassed to Zimbabwe the regional office. Zambian operations will form part of Liquid Telecoms focus on the Southern Africa region under the leadership of new regional Chief Executive Officer Wellington Nakamure.

“The acquisition of CEC Liquid Telecom represents another major milestone towards the delivery of Liquid Telecom’s vision to build Africa’s digital future,” said Nic Rudnick, Liquid Telecom Group CEO. 

“We have continued to expand the footprint of our network and broadened our award-winning product offering. These actions reinforce our position as a leader in cloud networking and digital transformation. We look forward to bringing the benefits of this acquisition to our valued clients across the region.”

By acquiring the remaining shares in the company, Liquid Telecom will be able to:

  • Focus on growing its wholesale, enterprise and retail offering across Zambia, resulting in improved customer service and the delivery of new products. This includes cloud-based services such as Microsoft Office 365 and Azure Stack, which will now be hosted locally in Zambia for the first time.
  • Invest further in its fibre network in Zambia, providing businesses and consumers with greater reach and network speeds across the country.
  • Connect Zambia to Liquid Telecom’s “One Africa” broadband network, allowing access to the single largest independent fibre network on the continent – stretching all the way from Cape Town to Cairo.

Read also:  Liquid Telecom appoints new Regional CEO of southern Africa

Liquid Telecom has been on an expansionary path connecting fiber across Africa from Cape to Cairo with Zambia as the hub of interconnectivity. Liquid Telecom is also in partnership with Microsoft for the establishment of two data centers in South Africa (Johannesburg and Cape town) to help address issues of internet latency.

Read also: Liquid Telecoms Africa partners with Microsoft for cloud computing solutions

Read also: What the African corporate bond market is signaling about data services and cloud computing

Trading assets

CEC Plc shares have had a fair share of volatility this year following two significant transactions relating to the CDC takeover which was unsuccessful and the 50% divesture of telecoms assets. 

Read also: Copperbelt Energy shares rally 43% on CDC -AP Moller USD380mn takeover bid

CEC Plc shares rallied over 44% to K2.12 per share as markets priced -in a takeover, however this momentum unwound tumbling the stock to pre – CDC offer levels (below K1.44 per share).  

As at 4.35pm CEC Plc. shares on the LuSE traded for K1.34 a share.

More articles on Copperbelt Energy and Liquid Telecoms Africa.