COMPANY NEWS IN BRIEF

Prosus sells online ads business

Naspers subsidiary Prosus is selling its Russian online classifieds business Avito to 45-year-old Russian businessman Ivan Tavrin.

Subsidiaries of Tavrin’s Kismet Capital Group will buy the business for 151 billion roubles (R44 billion). Earlier this year, Bloomberg reported that analysts had previously valued the company at around US$6 billion.

Tavrin is the former CEO of MegaFon, a Russian telecommunications provider. According to media reports, he is a former partner of Russian billionaire and Kremlin ally Alisher Usmanov. Tavrin has also been a past investor in the Russian social media site VK, selling his stake to a Usmanov-controlled business in 2014.

Prosus holds a 25.7% stake in VK. Following Russia's invasion of Ukraine and resultant international sanctions, Prosus wrote down the full value of this stake, and its directors on VK's board resigned.

Prosus announced in March that it had separated Avito from its OLX Group and no longer had any "day-to-day involvement".

Ukraine's Vice Prime Minister and Minister of Digital Transformation, Mykhailo Fedorov, previously accused Avito of hosting recruitment adverts for the Russian military and that users could find items looted from Ukraine for sale. Prosus, in response, said it was not aware of any adverts for military positions on Avito.

Tavrin’s businesses already required the necessary antitrust and financial regulatory approvals, Prosus said on Friday afternoon. The acquisition of Avito will be funded by cash and debt financing, and the deal should close later this month.-Fin24

Tongaat gets approval for restructuring plan

Sugar producer Tongaat, whose debt pile is more than tenfold its R545 million market value, has now received board approval for a proposed restructuring plan, saying on Friday it will now start talks to get the necessary nods from various stakeholders.

Tongaat on Friday did not go into any significant detail of its restructuring plan, and it has said previously all options are on the table, including a capital injection by some or all of its strategic partners, or a disposal of some or all of its non-SA operations.

The firm said on Friday that those whose participation is required for the plan will be receiving it "imminently", adding that "the sustainability of our businesses, employees and value change are front and centre of the plan".

"Critically, the restructuring plan contemplates an extension and an increase in the company’s commercial debt facilities to allow it to conclude the milling season and allow sufficient time to implement the restructuring plan.

"The company is engaged in ongoing negotiations to determine the availability of such facilities," it said.

The company, which produces almost half of SA’s sugar and is one of the biggest employers in KwaZulu-Natal, is battling to recover from an accounting scandal, SA’s second biggest after Steinhoff, while also trying to whittle down a R7.6 billion net debt pile. It has been hit with a series of adverse events, including a downturn in the property market in KwaZulu-Natal that hobbled plans to sell property, civil unrest in that province which led to destruction of cane fields, and more recently flooding in the province.-Fin24

Dis-Chem sticks to moratorium on hiring whites

JSE-listed pharmaceutical retailer Dis-Chem has issued a moratorium on hiring white people to improve its employment equity profile.

In a letter to senior management dated September 19, founder and CEO Ivan Saltzman announced the moratorium, which includes external appointments and internal promotions.

"It’s the ratio between white and black that counts. So, when no suitable black candidate is found, and a white is appointed, we need several blacks just to maintain the status quo, never mind moving forward," said Saltzman.

He referred to employment equity targets, and said that as Dis-Chem is a listed group, these "are harsh measures and necessary if we are to remain profitable and to avoid a potential fine of 10% of turnover which would cripple the business".

Fines for noncompliance with the Employment Equity Act have been increased to a maximum of R2.7 million or 10% of annual turnover, whichever is the greater, for repeat offenders, according to law firm Cliffe Dekker Hofmeyr.

Saltzman said the achievement of set employment equity targets would be incorporated into the bonus structures of management and the "allocation will be issued in due course".

"This will form a large part of your KPAs, probably a third. This is for real, each region has a base from which to work and a target."-Fin24

MTN talks to buy Telkom stalled

MTN Group’s talks to buy Telkom have stalled following a rival proposal from another telecom company, according to people familiar with the matter.

Negotiations about price and other terms have been halted for the time being, though MTN hasn’t decided to walk away from the deal, the people said, asking not to be identified because the discussions are confidential.

Telkom shares plunged as much as 16% following the Bloomberg News report, the most since April 2020. MTN, Africa’s largest wireless operator, stepped back after Telkom received an approach from Rain, creating uncertainty about its proposal, the people said. Rain said it had offered to sell itself to Telkom, which is partially owned by the South African government, in exchange for shares.

Talks could restart if Telkom clarifies its position on the Rain offer, the people said.

“MTN could be better off quitting merger talks with Telkom and focusing on growth investment,” Bloomberg Intelligence analyst John Davies said in a note to clients.

A representative for MTN declined to comment. A spokesperson for Telkom referred to the company’s statement on 4 October, which said that MTN’s proposal was still under consideration by both parties and that shareholders should exercise caution. The spokesperson declined to comment further.

MTN and Telkom’s potential combination would create South Africa’s largest mobile operator by subscribers, overtaking rival Vodacom. The move would likely raise antitrust concerns, given the number of major mobile networks in the country would be reduced to three from four, with the vast majority of subscribers controlled by the top two carriers.-Fin24

Vodacom spends R340 mln on rural network

Vodacom will spend R340 million to expand its network in areas in the central regions of Free State and the Northern Cape, with a focus on upgrading and adding new sites in rural areas.

The telecoms giant said part of the investment would include adding new 3G-, 4G-, and 5G-enabled sites in urban areas, as well as in deep rural areas, to further population coverage.

According to Vodacom, 3G coverage in the areas in the central region has already reached 98.25%, with 4G at 92%. There are plans in the pipeline to triple the 5G footprint in the two provinces by increasing the number of sites to 58.

Evah Mthimunye, managing executive for Vodacom's Central Region, said the network rollout programme last year had brought the internet to many communities for the first time.

Mthimunye said the central region had seen a massive jump in network traffic in the past year, which had to be supported by increased network capacity. "In addition to supporting the region's 44.2% year-on-year surge in data traffic, LTE capacity is crucial, as almost 90% of this data traffic is on LTE technology," Mthimunye explained.

"This financial year we want to build on this achievement by extending broadband coverage and investing in network upgrades to increase access to connectivity."

Mthimunye added that the drive was expected to close the digital divide between urban and rural areas.

Other companies in the sector have also revealed their plans for network expansion and increasing 5G connectivity.

Operators that secured spectrum in the March 2022 auction are expected to use some of it to connect rural areas and zero-rate some public benefit site, as part of the social obligations imposed by the Independent Communications Authority of South Africa (Icasa).-Fin24