AltX slowed us down, Celcom says of delisting decision
April 9, 2009
By Thabiso Mochiko
CELCOM would delist from the JSE's AltX next month, the company said yesterday, putting the blame on tough trading conditions and tedious requirements to comply with the bourse's rules.
The firm said this week that minority shareholders had approved a R75 million buyout offer.
Celcom, which listed on the JSE's small-cap board in 2006, was established 15 years ago by chief executive Stefano Brachini and his brother Luca.
The company provides a variety of cellphone products such as prepaid airtime and cellphone accessories such as earphones and cellphone car kits.
It listed during the AltX listing boom, but what followed was a strain in its margins due to competition and the slowing economy.
Brachini said the biggest reason the group chose to delist was because of the global credit crunch, which dried up funding for small companies.
"There is a lot of volatility in the market," he said.
However, he added that compliance with the listing was also challenging for the company.
"We are traders and have to spend a lot of time on corporate governance issue … The board has to make decisions on everything, as we have to convene board meetings. By the time you get the board to do something, opportunities are gone. In this converged environment you need to move quick and faster," said Brachini.
Asked about the company's financial performance, he said: "We performed better as a private company. We had 12 years of extreme growth at the time of our listing, (then) the market changed, margins were cut, business strategy changed … the listing slowed us down," he said.
The company did not regret its decision to list, but it would probably be better as a private entity, he added, noting that he did not rule out the possibility of listing again in future.
As part of the delisting, Celcom will sell its V Cellular Stores to management for R49 million in cash. The buyers will also hand back to Celcom 52.4 million Celcom shares worth R26.2 million in return for the 18 Vodacom retail franchises and the Nokia concept store.
After the delisting, the Brachini brothers will hold 66 percent (33 percent each) of the company, while Marcel Golding and Franklin Sonn's Convergenet will control 34 percent.
The brothers will be left with the accessory operations business.
Brachini said the market was volatile and he thought a lot of small-cap companies would probably be delisting.
One of those companies could be Huge Telecom, which provides least-cost routing solutions for businesses to save on phone costs. It announced this week that it had received a buyout offer from a strategic investor.
Noah Greenhill, the head of marketing and business development at the JSE, noted that the bourse would not be relaxing its compliance rules.
The share price of Celcom gained 2.27 percent to close at 45c, while AltX added 0.39 percent.
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