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November 8, 2007

Microsoft to acquire 12% of Blue Label Telecoms

Posted by David Hunter at 7:11 PM ET.

A stock exchange listing statement filed by South African reseller of phone services, Blue Label Telecoms, reveals that Microsoft will acquire 12 % of the company for over $80 million:

Microsoft will be issued shares for cash amounting to a roughly 4.5% interest in Blue Label after a private placing currently under way, and will buy another stake of about 7.5% in the placing and from other shareholders, the company said in a statement to the Johannesburg Securities Exchange.

The company didn’t disclose the value of the acquisition, although Blue Label previously said it hoped to raise about 1.3 billion rand ($200 million) issuing shares to investors and institutions at a price of between ZAR5.75 and ZAR6.75 a share.

The original private placing, which is ahead of an expected listing on the JSE Nov. 14, was to have represented about 30% of Blue Label’s shares.

I make that to be a US $83.3 million investment.

So what’s Microsoft getting? The corporate history of Blue Label Telecoms is a trifle complex, but they are very big in prepaid cellular service and other prepaid products and services in 11 developing countries (including South Africa, Brazil, India, Mozambique, and the Democratic Republic of Congo) and expected to report $52 million in net profit before one-off items in the year to May. Besides the investment, Microsoft also apparently gets an advertising hook at Blue Label and more:

Blue Label said Microsoft would provide the firm with advertising services and access and licences to various web-based and mobile technologies and services.

“Blue Label Telecoms and Microsoft will exercise commercially reasonable efforts to provide mutual assistance to one another in exploring new business opportunities.”

No explicit details of that part of the arrangement were immediately forthcoming.

Filed under Acquisitions, Blue Label Telecoms, Coopetition, Microsoft

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