Isolution acquires equity in ALTONet!
[Johannesburg, 18 April 2006] - JSE-listed Interconnective Solutions (Isolution) has acquired 40% of Internet and network services provider ALTONet.
ALTONet, a first-tier Web hosting and data networking company, was founded in 1997.
The group is paying R750 000 for the stake, paid by the issue of about 3.57 million Isolution shares at 21c each.
Isolution CEO Mark Smith says the acquisition is a strategic move as being able to package Internet connectivity and related network services is central to subsidiary Foneworx's plan to increase its bouquet of services.
Smith says Foneworx is launching an online product called the Virtual Business Centre, incorporating about 14 business applications, including voice over Internet Protocol, aimed at the small, medium and micro-enterprise market.
The acquisition allows Isolution to provide users with connectivity and affordable bandwidth. In addition, the deal will increase Foneworx's earnings.
“Due to the phenomenal growth of our Fax2Email subscriber base, the group's own bandwidth requirements were becoming more demanding and a large percentage of our expenses was becoming attributable to bandwidth.
“It made absolute sense to have equity in ALTONet and also direct a large portion of network connectivity via this company, so we enjoy the upside of the earnings via ALTONet and at the same time grow ALTONet and its client base,” says Smith.
Isolution has an option to acquire a further 11% in ALTONet after 12 months.
In March Isolution reported that it had achieved headline earnings of 0.73c a share for the six months to December, compared with 0.62c a share for the same period a year earlier. Basic headline earnings rose to 0.58c from 0.48c a share previously.
This was despite a drop in revenue from R16.06 million to R13.61 million. Smith said at the time that improved margins resulted from the sales mix moving more favourably to the group's suite of business services.
The Isolution share closed untraded at 24c on Thursday, ahead of the Easter long weekend.