Liquid Telecommunications Holdings, a company linked to Zimbabwean billionaire, Strive Masiyiwa, is acquiring back the stake it offered Botswana Power Corporation. This will see the restructuring of 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, Liquid Telecommunications Holdings (Liquid Telecom) which has a controlling 57.5% stake in Liquid Telecommunications Botswana (Liquid Telecom Botswana) intends to acquire the rest of 42.5% currently held by Botswana Power Corporation (BPC) in Liquid Telecom Botswana. The Competition and Consumer Authority is reportedly poring over the merger and acquisition proposal.
The latest move marks the end to the forbidden love affair between BPC and Liquid Telecom. The government derailed the organisations’ plans to become a major internet service provider in the country, a deal that was backed by Masiyiwa’s Econet Global Limited. Econet is the majority shareholder in Liquid Telecom Group – the largest multi-country, open-access fibre network and data centre operator in Africa.
Liquid Telecom’s fibre optic network stretches over 50,000km 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 the government’s refusal to issue it with a telecommunications licence.
In 2016, BPC and Liquid Telecom announced they’d entered into a joint venture to establish a wholesale telecommunications service provider. At the core of the deal was an agreement that Liquid Telecom would tap into BPC’s expansive infrastructure, creating a new telecoms network provider with extensive reach across the country. Liquid Telecom was the preferred joint venture partner following a competitive bidding process in which five local (including state-owned BoFiNet) and international telecommunications companies submitted bids.
At the time, BPC and Liquid Telecom said the way the deal was structured would enable BPC to make more effective use of its existing assets. However, the initial deal went up in smoke in 2018 after the Transport and Communications ministry proposed a change to the business model. The ministry barred the new venture from using the national optic fibre, including that of BPC. This decision was approved by the 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 closed the book on the Liquid Telecom’s business model, which involves penetrating other markets through the acquisition of existing fibre networks. The company has used acquisitions to rapidly grow its fibre networks in new markets like Kenya, Uganda, Rwanda and Tanzania as well as to strengthen its market position in countries including South Africa, Zimbabwe and Zambia.
Liquid Telecom lists its cross-border fibre network as its key strength, which affords the company a unique market position and provides a significant barrier to entry for competitors, the company said in a memorandum in 2017 when it was raising $700 million from sophisticated investors.
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