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EOH’s shares leap as it sells telecoms assets to Seacom

EOH is reducing its debt as part of its turnaround strategy. | Timothy Bernard African News Agency (ANA)

EOH is reducing its debt as part of its turnaround strategy. | Timothy Bernard African News Agency (ANA)

Published Apr 8, 2022

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TECHNOLOGY group EOH’s shares leapt nearly 4 percent yesterday after it announced the sale of two of its businesses to telecoms firm Seacom for R144.9 million as it continues to pair down its debt.

In late afternoon trade the share was trading at R6.27.

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In a statement, EOH said the proceeds from the sale of Network Solutions (EOH-NS) and Hymax would primarily be applied to reduce its debt.

EOH had almost R2.1 billion in gross debt at the financial year-end in July 2021, down from R2.4 billion in 2020.

EOH, which is trying to turn its fortunes around following a corruption scandal, for the financial year 2021 generated an operating profit of R147 million following a whopping loss of R1.3 billion in 2020.

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However, the deal still needs to get the green light from the Competition Commission.

EOH group chief executive Stephen van Coller said yesterday that EOH had embarked on a targeted disposals strategy, which included assets that were capital intensive.

“In support of this and due to EOH’s current capital constraints, relative to the Mobile Network Operators (MNOs), and as the group prioritises creating a fit-for-purpose capital structure, we have looked to ensure that EOH-NS and Hymax can continue investing in world-class infrastructure and maintain their service excellence,” he said.

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EOH-NS and Hymax, both operating under the iOCO division, have vast experience in the delivery of wholesale and managed service solutions for the networking and voice segments of the telecommunications industry.

Van Coller said he believed that Seacom, as a leading ICT and internet connectivity supplier for African enterprises, would provide a compelling opportunity for value unlock for EOH-NS and Hymax, both for existing and future clients and the transferring employees.

“The embedded relationships that exist between our customers and other EOH business units will remain as is, and the EOH Infrastructure Services business is positioned to benefit from the transaction as we leverage the Seacom connectivity expertise,” he said.

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The deal comes hot on the heels of EOH last month announcing that its subsidiary EOH Mthombo had inked a deal to sell Hoonar Tekwurks Consulting South Africa, Managed Integrity Evaluation, Xpert Decision Systems and Zenaptix, collectively known as Information Services, for R400m.

Seacom group chief executive Oliver Fortuin said the acquisition of EOH-NS and Hymax formed part of Seacom’s ambitious growth strategy that would transform the business into a converged telecoms provider across Africa.

“By expanding our on-net capabilities and reach with this acquisition and the acquisition of Hirani Telecom and Africell Uganda’s infrastructure, Seacom aims to provide customers with comprehensive enterprise-grade ICT solutions and quality connectivity,” he said.

BUSINESS REPORT

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