Company News in Brief
Blocked Vodacom merger derails South African telcos M&A push, analysts say
The Competition Tribunal's decision to block a merger between Vodacom and a major fibre operator will likely derail a push by South African telecoms firms to use big M&A deals as a shortcut to digital infrastructure expansion, analysts said.
The ruling, which blocked South Africa's top telco from taking a 30% stake in major fibre operator Maziv, could force companies to build their own networks or pursue smaller, less controversial tie-ups, delaying much-needed investment by years.
For Andrew Bahlmann of M&A advisory firm Deal Leaders International, it is a setback for the entire industry.
"For telcos and fibre network operators contemplating future mergers, this prohibition of a merger for which the business case was clearly positive indicates that the path to consolidation is fraught with challenges," he said.
The communications sector in Africa's most advanced economy needs significant capital injections to ramp up infrastructure development, particularly if connectivity is to be improved in low income and rural areas.
In 2022, MTN's talks to buy out smaller rival Telkom fell through. And last year, Rain's push to be bought by Telkom ended without a deal.
Vodacom had pledged that much of the 6-9 billion rand ($342-512 million) in cash it was offering as part of the Maziv bid would go to infrastructure investment. It said a further 10 billion rand over five years would target investment in mainly low income areas.
But that was not enough to win over the tribunal.
That now leaves the company, and the sector more broadly, with slow and costly expansion options.
"Vodacom can continue with its own fibre network rollout and consider merging with several other small regional fibre operators," Peter Takaendesa, head of equities at Mergence Investment Managers, said.
Vodacom declined to comment.
But analysts say that the Competition Tribunal's decision will make M&A deals in South Africa's telecoms sector much less attractive to capital.
And even with financing, factors including environmental approval timelines and fibre equipment supply chains mean the big mobile operators have a long road ahead if they are to make up ground on existing fibre networks.
"My guess is five to 10 years," Takaendesa said.
-REUTERS
Redefine reports 2.9% fall in annual income, outlook improves
South African commercial property group Redefine on Monday that its full-year distributable income fell 2.9%, at the centre of its forecast range and still affected by a prolonged period of high interest rates.
The group said its distributable income per share - which is equivalent to net profit and one of the primary measures of underlying financial performance in the listed property sector - declined to 50.02 cents in the year ended Aug. 31, from 51.53 cents a year earlier.
It expects distributable income of between 50 and 53 cents per share for 2025, helped by an improving operating environment, particularly since South Africa began cutting interest rates in September for the first time in four years.
"This year has marked a crucial turning point for the property sector, as easing interest rates and increasing confidence are leading to better property fundamentals and a more favourable operating environment," the company said in a statement.
Revenue grew by 7.5% to 10.65 billion rand ($607 million) as the group reported recovery across its key operational metrics. However, this was offset by net finance charges which increased by 15.1% to 2.1 billion rand.
“We anticipate further improvements in occupancy rates for FY25 (financial year 2025) due to positive sentiment and decreasing interest rates, which are expected to enhance consumer spending power,” Chief Operating Officer Leon Kok said.
-REUTERS
AECI to sell SA's biggest asphalt business for R1bn to Old Mutual, Sphere
Africa's biggest commercial-explosives maker AECI has inked a R1.1 billion deal to sell its Much Asphalt business, SA's largest, as it looks to focus on its core mining and chemical businesses. The sale is to Old Mutual Private Equity (OMPE) and Sphere Investments, which is a black-empowered firm headquartered in Johannesburg that is backed by the Public Investment Corporation.
Much Asphalt is South Africa's leading independent manufacturer and supplier of bituminous products. The company manufactures and delivers products for use in infrastructure such as roads, airport runways. It owns and operates 14 static plants in the major centres of South Africa and is the majority shareholder in East Coast Asphalt, which operates two plants in East London and Mthatha. AECI, valued at over R10 billion on the JSE, had completed the acquisition of the business for about R2.3 billion in 2018. The business accounted for about 7% of group revenue in 2023 when it also reported it was seeing signs of recovery for SA road construction with a good order book flowing into 2024.
The move comes as AECI eyes the number 3 position in global mining explosives, from between 4 and 6 currently, by 2030. The company employs some 7 000 people at 100 sites in 22 countries. "Together, OMPE and Sphere provide a platform for financial strength, market access and long-term success for Much Asphalt," AECI CEO Holger Riemensperger said in a statement. "This transaction is another significant step in our strategic journey, and we are pleased with the outcome." Shares of AECI were down marginally on Monday morning and have fallen about 12% in the past year.
FIN24
Altron's dividend jumps 60% as it adds scale, customers
ICT group Altron, the owner of vehicle tracker Netstar, reported a 60% jump in its interim dividend on Monday, saying it is benefiting from increased scale as it adds customers.
The group reported that revenue fell 2% to about R4.9 billion in the six months to end August, as it was affected by the sale of its ATM hardware and support business in 2023, but core profit jumped 95% to R905 million. When excluding the effect of acquisitions and disposals, headline earnings per share climbed 50% to 72c, and the group upped its dividend by 60% to 40c per share - or about R164 million. Valued at R7.45 billion on the JSE, Altron reorganised itself into three operating platforms in March. Its platforms segment includes Netstar, payments business Altron FinTech, and Altron HealthTech, which provides switching transactions and manages healthcare records.
Altron's shares had only eked out about a 0.1% gain on Monday morning but have rocketed about 121% in the past twelve months.
-FIN24
AI powers Apple's iPhone sales
Apple's AI-enhanced iPhone made a strong start, helping push quarterly sales ahead of Wall Street expectations, but questions about whether the rollout will continue apace were underscored by a modest revenue forecast. A decline in China sales during the fourth quarter also concerned some analysts and investors, helping send shares down about 2% in after-hours trade, despite surprisingly large overall profit and revenue in the fourth quarter. "We expect our December quarter, total company revenue to grow low to mid-single digits year over year," CFO Luca Maestri said on a call with analysts, referring to Apple's current first quarter. Analysts had expected revenue growth of 6.65% to $127.53 billion during the first quarter, according to LSEG data. IPhone sales helped steady Apple's fourth-quarter sales in China, which were down less than 1% to $15.03 billion overall. But analysts were expecting larger China sales, of $15.78 billion, according to data from Visible Alpha.
Exxon Mobil beats profit estimate
Exxon Mobil on Friday beat Wall Street's third quarter profit estimate, boosted by strong oil output in its first full quarter that includes volumes from US shale producer Pioneer Natural Resources. Oil industry earnings have been squeezed this year by slowing demand and weak margins on gasoline and diesel. But Exxon's year-over-year profit fell 5%, a much smaller drop than at rivals BP and TotalEnergies, which posted sharply lower quarterly results. The US oil producer reported income of $8.61 billion (R152 billion), down from $9.07 billion a year ago. Its $1.92 per share profit topped Wall Street's outlook of $1.88 per share on higher oil and gas production and spending constraints. "We had a number of production records" in the quarter, said finance chief Kathryn Mikells, citing an about 25% year-on-year increase in oil and gas output to 4.6 million barrels per day. — Reuters.
The Competition Tribunal's decision to block a merger between Vodacom and a major fibre operator will likely derail a push by South African telecoms firms to use big M&A deals as a shortcut to digital infrastructure expansion, analysts said.
The ruling, which blocked South Africa's top telco from taking a 30% stake in major fibre operator Maziv, could force companies to build their own networks or pursue smaller, less controversial tie-ups, delaying much-needed investment by years.
For Andrew Bahlmann of M&A advisory firm Deal Leaders International, it is a setback for the entire industry.
"For telcos and fibre network operators contemplating future mergers, this prohibition of a merger for which the business case was clearly positive indicates that the path to consolidation is fraught with challenges," he said.
The communications sector in Africa's most advanced economy needs significant capital injections to ramp up infrastructure development, particularly if connectivity is to be improved in low income and rural areas.
In 2022, MTN's talks to buy out smaller rival Telkom fell through. And last year, Rain's push to be bought by Telkom ended without a deal.
Vodacom had pledged that much of the 6-9 billion rand ($342-512 million) in cash it was offering as part of the Maziv bid would go to infrastructure investment. It said a further 10 billion rand over five years would target investment in mainly low income areas.
But that was not enough to win over the tribunal.
That now leaves the company, and the sector more broadly, with slow and costly expansion options.
"Vodacom can continue with its own fibre network rollout and consider merging with several other small regional fibre operators," Peter Takaendesa, head of equities at Mergence Investment Managers, said.
Vodacom declined to comment.
But analysts say that the Competition Tribunal's decision will make M&A deals in South Africa's telecoms sector much less attractive to capital.
And even with financing, factors including environmental approval timelines and fibre equipment supply chains mean the big mobile operators have a long road ahead if they are to make up ground on existing fibre networks.
"My guess is five to 10 years," Takaendesa said.
-REUTERS
Redefine reports 2.9% fall in annual income, outlook improves
South African commercial property group Redefine on Monday that its full-year distributable income fell 2.9%, at the centre of its forecast range and still affected by a prolonged period of high interest rates.
The group said its distributable income per share - which is equivalent to net profit and one of the primary measures of underlying financial performance in the listed property sector - declined to 50.02 cents in the year ended Aug. 31, from 51.53 cents a year earlier.
It expects distributable income of between 50 and 53 cents per share for 2025, helped by an improving operating environment, particularly since South Africa began cutting interest rates in September for the first time in four years.
"This year has marked a crucial turning point for the property sector, as easing interest rates and increasing confidence are leading to better property fundamentals and a more favourable operating environment," the company said in a statement.
Revenue grew by 7.5% to 10.65 billion rand ($607 million) as the group reported recovery across its key operational metrics. However, this was offset by net finance charges which increased by 15.1% to 2.1 billion rand.
“We anticipate further improvements in occupancy rates for FY25 (financial year 2025) due to positive sentiment and decreasing interest rates, which are expected to enhance consumer spending power,” Chief Operating Officer Leon Kok said.
-REUTERS
AECI to sell SA's biggest asphalt business for R1bn to Old Mutual, Sphere
Africa's biggest commercial-explosives maker AECI has inked a R1.1 billion deal to sell its Much Asphalt business, SA's largest, as it looks to focus on its core mining and chemical businesses. The sale is to Old Mutual Private Equity (OMPE) and Sphere Investments, which is a black-empowered firm headquartered in Johannesburg that is backed by the Public Investment Corporation.
Much Asphalt is South Africa's leading independent manufacturer and supplier of bituminous products. The company manufactures and delivers products for use in infrastructure such as roads, airport runways. It owns and operates 14 static plants in the major centres of South Africa and is the majority shareholder in East Coast Asphalt, which operates two plants in East London and Mthatha. AECI, valued at over R10 billion on the JSE, had completed the acquisition of the business for about R2.3 billion in 2018. The business accounted for about 7% of group revenue in 2023 when it also reported it was seeing signs of recovery for SA road construction with a good order book flowing into 2024.
The move comes as AECI eyes the number 3 position in global mining explosives, from between 4 and 6 currently, by 2030. The company employs some 7 000 people at 100 sites in 22 countries. "Together, OMPE and Sphere provide a platform for financial strength, market access and long-term success for Much Asphalt," AECI CEO Holger Riemensperger said in a statement. "This transaction is another significant step in our strategic journey, and we are pleased with the outcome." Shares of AECI were down marginally on Monday morning and have fallen about 12% in the past year.
FIN24
Altron's dividend jumps 60% as it adds scale, customers
ICT group Altron, the owner of vehicle tracker Netstar, reported a 60% jump in its interim dividend on Monday, saying it is benefiting from increased scale as it adds customers.
The group reported that revenue fell 2% to about R4.9 billion in the six months to end August, as it was affected by the sale of its ATM hardware and support business in 2023, but core profit jumped 95% to R905 million. When excluding the effect of acquisitions and disposals, headline earnings per share climbed 50% to 72c, and the group upped its dividend by 60% to 40c per share - or about R164 million. Valued at R7.45 billion on the JSE, Altron reorganised itself into three operating platforms in March. Its platforms segment includes Netstar, payments business Altron FinTech, and Altron HealthTech, which provides switching transactions and manages healthcare records.
Altron's shares had only eked out about a 0.1% gain on Monday morning but have rocketed about 121% in the past twelve months.
-FIN24
AI powers Apple's iPhone sales
Apple's AI-enhanced iPhone made a strong start, helping push quarterly sales ahead of Wall Street expectations, but questions about whether the rollout will continue apace were underscored by a modest revenue forecast. A decline in China sales during the fourth quarter also concerned some analysts and investors, helping send shares down about 2% in after-hours trade, despite surprisingly large overall profit and revenue in the fourth quarter. "We expect our December quarter, total company revenue to grow low to mid-single digits year over year," CFO Luca Maestri said on a call with analysts, referring to Apple's current first quarter. Analysts had expected revenue growth of 6.65% to $127.53 billion during the first quarter, according to LSEG data. IPhone sales helped steady Apple's fourth-quarter sales in China, which were down less than 1% to $15.03 billion overall. But analysts were expecting larger China sales, of $15.78 billion, according to data from Visible Alpha.
Exxon Mobil beats profit estimate
Exxon Mobil on Friday beat Wall Street's third quarter profit estimate, boosted by strong oil output in its first full quarter that includes volumes from US shale producer Pioneer Natural Resources. Oil industry earnings have been squeezed this year by slowing demand and weak margins on gasoline and diesel. But Exxon's year-over-year profit fell 5%, a much smaller drop than at rivals BP and TotalEnergies, which posted sharply lower quarterly results. The US oil producer reported income of $8.61 billion (R152 billion), down from $9.07 billion a year ago. Its $1.92 per share profit topped Wall Street's outlook of $1.88 per share on higher oil and gas production and spending constraints. "We had a number of production records" in the quarter, said finance chief Kathryn Mikells, citing an about 25% year-on-year increase in oil and gas output to 4.6 million barrels per day. — Reuters.
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