Liquid Telecommunications Holdings, a company linked to Zimbabwean billionaire Strive Masiyiwa, is acquiring back the stake it offered to Botswana Power Corporation, restructuring a partnership that was thwarted by the Botswana government, which prevented the company from gaining immediate access to the country’s massive fibre network.
In the latest merger and acquisition proposal that is being pored over by the Competition and Consumer Authority, Liquid Telecommunications Holdings (Liquid Telecom) which has a controlling 57.5 percent stake in Liquid Telecommunications Botswana (Liquid Telecom Botswana) intends to acquire the rest of 42.5 percent currently held by Botswana Power Corporation (BPC) in Liquid Telecom Botswana.
The latest move marks an end of forbidden love between BPC and Liquid Telecom, with the relationship rocked by the government which derailed the plans of the organisations to become a major internet service provider in the country. The deal was backed by the billionaire Masiyiwa of Econet Global Limited, which is the majority shareholder in Liquid Telecom Group – the largest multi-country, open access fibre network and data center operators in Africa.
Liquid Telecom’s fibre optic network stretches over 50,000 km across nine African countries. The company has been seeking to establish a dominant presence in Botswana. Masiyiwa is very familiar with Botswana’s telecommunication landscape, having been one of the founders of Mascom, the country’s biggest mobile network operator. Nonetheless, Masiyiwa’s latest venture in Botswana has faced challenges, including refusal by the government to issue it with a telecommunications licence.
In 2016, BPC and Liquid Telecom announced that they have entered into a joint venture for the establishment of a wholesale telecommunications service provider. At the core of the deal was an agreement that Liquid Telecom will tap into BPC’s expansive infrastructure, creating a new telecoms network provider with extensive reach across the country. Liquid Telecom was selected as the preferred joint venture partner following a competitive bidding process, in which five local (including state-owned BoFiNet) and international telecommunications companies submitted bids.
The two partners at the time said the structure of the deal would enable BPC to make more effective use of its existing assets. However, the initial deal was derailed in 2018 after the Transport and Communications ministry proposed a change to the business model, barring the new venture from using the national optic fibre including that of BPC. This decision was approved by cabinet in May 2018, two months before the completion of the National Broadband Strategy (NBS).
The ministry said part of implementing the NBS required consolidation of all government owned ICT infrastructure. To this end, Water Utilities Corporation (WUC) and BPC fibre networks are bundled in a single asset to be managed by BoFiNet. According to the ministry, the fibre networks and broadcasting facilities will be made available to all market players on an equitable, non-discriminatory and open access basis. The separation and transfer of these facilities was scheduled to be completed by end of 2019/2020 financial year, which ended in March this year.
This has thrown a spanner in Liquid Telecom’s business model that involves penetrating other markets through acquisition of existing fibre networks. The company has used acquisitions to rapidly grow its fibre network in new markets like Kenya, Uganda, Rwanda and Tanzania, and has used acquisitions to strengthen market position such as in South Africa, Zimbabwe and Zambia.
In fact, Liquid Telecom lists its cross-border fibre network as its key strength, which affords the company unique market position and provides significant barrier to entry of competitors, the company said in a memorandum in 2017 when it was raising $700 million from sophisticated investors.
