TeleMasters Sells 30% Stake in Catalytic Connections to Sebenza Education

Strategic Move: TeleMasters Holdings Finalizes Disposal of 30% Stake in Catalytic Connections

TeleMasters Holdings Limited has completed the sale of a 30% stake in its key subsidiary, Catalytic Connections Proprietary Limited, to Sebenza Education and Empowerment Holdings Proprietary Limited. This transaction marks a pivotal step for TeleMasters as it aligns with evolving empowerment initiatives and adapts to recent regulatory shifts in South Africa’s communications sector.

Sebenza, an organization focused on supporting historically disadvantaged students and entrepreneurs, has acquired 30 newly issued no-par-value shares in Catalytic. The company specializes in providing ICT managed solutions tailored for small and medium enterprises. This acquisition is consistent with Sebenza's broader mission to create educational and business opportunities for underserved communities.

The decision to divest was influenced by new licensing provisions introduced by the Independent Communications Authority of South Africa (ICASA), which became effective on March 31, 2024. TeleMasters has been actively engaged in empowerment efforts and views this deal as a strategic partnership that enhances its operational value. According to filings with the Johannesburg Stock Exchange (JSE), Sebenza is not considered a related party under the JSE Listings Requirements.

Restructuring and Share Distribution

The restructuring involved the creation of new preference shares solely owned by TeleMasters, ensuring that the historical value of Catalytic remains under its control. Ordinary shares were then issued in a 70:30 ratio between TeleMasters and Sebenza. Both entities contributed to Catalytic’s bank account, reflecting their shared commitment to the subsidiary's growth.

The transaction is unconditional, though necessary documentation is still being filed with the Companies and Intellectual Property Commission (CIPC). The disposal became effective on March 31, 2024, signaling a new phase in TeleMasters' strategic collaborations.

Financial Overview of Catalytic Connections

In the six months ending December 31, 2023, Catalytic reported external revenue of R28,143,294 and internal revenue of R3,597,253. Its EBITDA stood at R3,521,141, with a net profit before tax of R1,020,590. After accounting for taxes at a notional rate of 27%, the net profit was R745,031. The company recorded net liabilities of (R2,469,444).

Key Terms and Future Prospects

The agreement includes standard warranties and indemnities, along with a call option that allows TeleMasters to potentially reacquire shares from other Catalytic shareholders based on future valuations. Sebenza will also appoint a new director to Catalytic’s board, with the announcement pending on SENS.

This disposal is classified as a category 2 transaction under the JSE Listings Requirements. As a result, the previous cautionary announcement has been withdrawn, enabling shareholders to resume regular trading of their TeleMasters shares.

Impact on TeleMasters’ Strategic Direction

By divesting a portion of its stake in Catalytic, TeleMasters is positioning itself to focus more on empowerment and regulatory compliance while maintaining a significant influence over the subsidiary. This move reflects a broader trend among companies in South Africa to align with national economic goals and ensure long-term sustainability.

The collaboration with Sebenza not only strengthens TeleMasters’ portfolio but also reinforces its role in fostering inclusive growth. As the telecommunications sector continues to evolve, such strategic alliances are likely to become increasingly important for companies seeking to remain competitive and socially responsible.