JSE-listed Reunert has acquired privately held ECN Telecoms in a deal that could presage further consolidation in the telecommunications sector. The value of the transaction has not been disclosed and is subject to approval by the competition authorities.

The deal is meant to bolster the “converged voice and data capabilities” of Reunert subsidiary Nashua Mobile.

ECN CEO John Holdsworth says the two companies will “share knowledge and leverage expertise across the group”. Nashua Mobile CEO Andy Baker says the acquisition of ECN will enhance his company’s efforts to “bring fully converged services” to its customers.

ECN, which is headquartered in Johannesburg and was founded in 2005, has an electronic communications network with points of presence in Johannesburg, Pretoria, Durban, Cape Town, Bloemfontein and Port Elizabeth.

The market has believed for some time that ECN was for sale, with suggestions that it could be acquired by one of the country’s mobile operators.

The deal positions Nashua Mobile more strongly against rivals like Altech Autopage Cellular, whose sister company Altech Technology Concepts has built its own network to bolster the group’s converged telecoms offerings as wholesale call prices come down and competition in the sector intensifies.

Ongoing reductions in wholesale mobile call termination rates — the fees the operators charge each other to carry calls on their networks — have put pressure on companies with exposure to the least-cost routing (LCR) market.

LCR players have taken advantage of arbitrage opportunities associated with high call termination rates, but as these rates have come down, this has put pressure on companies such as Nashua Mobile, Vox Telecom and Huge Group.

Industry analysts have long predicted consolidation in the sector on the back of pressure on margins, particularly among companies with exposure to LCR. Reunert’s acquisition of ECN could mark the start of further industry consolidation. — Staff reporter, TechCentral