VOX - VOX Telecom Limited - Acquisition of Storm Telecom (Pty) Ltd
VOX TELECOM LIMITED
(formerly DataPro Group Limited)
(Registration number 1998/016433/06)
("Vox Telecom" or "the Company" or "the Group")
JSE Code: VOX
ISIN Code: ZAE000097234
ACQUISITION OF STORM TELECOM (PTY) LTD
Further to the cautionary announcement published on 16 August 2007 and renewed
on 15 October 2007, the board of directors of Vox Telecom ("Vox") are pleased to
advise shareholders that the Company has entered into a binding agreement to
acquire the entire issued share capital and claims on loan account in STWS
Limited and its wholly owned subsidiaries, Storm Telecom (Pty) Limited ("Storm
Telecom") and Storm Internet (Pty) Limited ("Storm Internet") (collectively,
"Storm"), ("the Storm Acquisition"), with effect from 1 December 2007, from
Storm`s shareholders ("Vendors").
The purchase price is R360 million to be settled by a combination of Vox`s own
cash resources, term loan facilities available to the Company as well as a
placement of Vox Telecom shares to the Vendors, which in turn Vox will be
obliged to place in the market through a vendor consideration placement.
The Proposed Transaction remains subject to the conditions precedent set out in
paragraph 4 below.
2. Storm Overview
Storm is considered one of South Africa`s leading alternative telephony service
providers, offering voice services via a variety of technologies including:
Voice over IP ("VoIP"), cellular least cost routing ("LCR") and international
Storm is also a leading provider of corporate internet services as well as being
the fifth largest domestic internet service provider ("ISP") with a
sophisticated IP network providing internet access, hosting, virtual private
networks and security services.
Storm has more than 6000 customers including many of South Africa`s largest
public and private corporations. The current Storm annuity income derived from
its contracted customer base is in excess of R22 million per month.
3. Rationale for the Storm Acquisition
Vox Telecom`s strategy continues to be the establishment of the Company as the
preferred telecommunications alternative to the domestic incumbents, in the
rapidly converging and deregulating industries of voice and data.
The Storm Acquisition is regarded as being material for Vox and highly strategic
as it will considerably improve Vox`s positioning in the VoIP telephony market
and augment Vox`s corporate customer base profile and market share.
Vox intends integrating Storm`s telephony business into its wholly owned
subsidiary responsible for corporate telephony solutions, Orion Telecom
(Proprietary) Limited ("Orion") and the Internet business into its wholly owned
subsidiaries responsible for corporate ISP services, DataPro (Proprietary)
Limited ("DataPro") and consumer ISP services, @lantic Internet Services
Storm is anticipated to materially improve the scale and strategic position of
Vox`s existing telephony businesses, particularly their Voice-over-IP ("VoIP")
technology and contracted managed services VoIP customer base.
Similarly, the addition of Storm`s internet customer base will solidify
DataPro`s corporate ISP positioning as a leading service provider in this market
Most significantly, Vox as a trade buyer is in a distinctive position whereby it
is able to utilise its existing synergistic cost structures and telephony
platform to leverage material, accretive contributions from Storm`s contracted
annuity customer base, without adding materially to Vox`s overall overhead
The acquisition agreements contemplate certain synergy benefit and cost savings
being achieved by Vox on handover of the Storm business and the effects of this
will be more fully disclosed in the financial effects of the Storm Acquisition,
which will be released immediately upon finalisation thereof by Vox.
4. Conditions Precedent
The Storm Acquisition remains subject to the following conditions precedent:
* By not later than 30 November 2007 Vox obtains the consent of the Exchange
Control Department of the SARB to purchase Storm;
* By not later than 30 November 2007 those of the sellers who require the
consent of the Exchange Control Department of the SARB to remit their share
of the purchase consideration overseas obtain such consent;
* By not later than 14 December 2007 the Parties obtain final unconditional
approval for the implementation of the transaction in terms of the
Competition Act, 89 of 1998; and
* All other statutory or regulatory approvals as may be necessary, including
the approval of the JSE.
5. Further Announcements
Further announcements will be made on SENS as soon as the financial effects of
the Storm Acquisition are finalised and any of the conditions precedent have
been fulfilled or waived, as the case may be.
10 October 2007
Arcay Moela Sponsors (Proprietary) Limited
Metier Advisory (Pty) Limited
Date: 10/10/2007 08:00:04 Produced by the JSE SENS Department.
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