JSE-listed Allied Technologies (Altech) on Tuesday said it had sold its loss-making East African operations to Mauritius-headquartered telecommunications group Liquid Telecommunications.

As part of the transaction, Altech would acquire an initial 8.6% stake in Liquid for $16.5-million, exchanging, in effect, its losses for returns, Altech Group CEO Craig Venter said on Tuesday.

The deal would boost the Altech group’s performance, which had been weighed down during the past year by the underperforming Altech East Africa, as well as its West African unit, which Altech was also attempting to shed.

In September, Altech initiated formal processes to find a partner for the challenged Altech East Africa, as Venter believed this would accelerate the turnaround for the once profitable division.

The operation had brought in profits of R30-million in the first year of entry and another R100-million the year thereafter, but the “wheels came off” in the third year.

Liquid Telecommunications would absorb ownership of Altech’s 61% stake in Kenya Data Networks, Democratic Republic of Congo- (DRC-) based Africa Data Networks, voice, data and mobility solutions company Swift Global, Rwanda-based service provider Stream and Uganda-based Internet service provider (ISP) InfoCom.

The deal expanded Liquid Telecommunications' single fibre network assets from Southern and Central Africa into East Africa, spanning Kenya, Uganda, Rwanda, Zambia, Zimbabwe, Botswana, the DRC, Lesotho and South Africa, enabling the company to provide reliable, high-speed, cost-effective connectivity to carriers, mobile operators, ISPs, homes, financial institutions and businesses of all sizes.

“Altech’s East African operation has built the largest fibre network in the region, which has huge potential. I strongly believe that its people, its network and its customers will all add value and opportunity to our current operations,” Liquid CEO Nic Rudnick said.

The transaction remained subject to conditions, including board and regulatory approvals.