Tata Communications in talks to sell majority stake in Neotel to Vodacom

Tata Communications said on Monday that it is in talks with Vodacom to sell its majority holding in South African communications venture Neotel. It said shareholders of Neotel have entered into exclusive discussions regarding a potential acquisition of 100 per cent of the shares of Neotel by Vodacom SA.

Tata Communications owns 67.32 per cent of Neotel with the rest held by CommuniTel and Nexus Connection.

Earlier, Bloomberg had reported that the overall deal could be worth $500 million. Based on this valuation, Tata Communications could get over $330 million.

The finalisation of the transaction is subject to the successful conclusion of commercial negotiations and receiving the requisite regulatory and corporate approvals.

This transaction, if concluded, would stimulate greater competition in the South African fixed telecommunications sector and will accelerate the provision of high speed data links.

Speaking about the transaction, Vodacom Group CEO Shameel Joosub said: “By further building on the capabilities within Neotel, we would also aim to develop entirely new services such as fibre to the home and business. Neotel has access to over 15,000 km of fibre-optic cable, including 8,000km of metro fibre in Johannesburg, Cape Town and Durban.”

He said spectrum is also an important consideration as the combined entity could use this resource more efficiently.

Vodacom is an African mobile communications company providing voice, messaging, data and converged services to around 50 million active customers. From its roots in South Africa, it has grown its operations to include networks in Tanzania, the Democratic Republic of Congo, Mozambique and Lesotho.

Majority owned by Vodafone, it is listed on the JSE Ltd; its head office is in Johannesburg, South Africa.

Sunil Joshi, Neotel CEO, said: “We believe this presents an exciting and attractive opportunity for all parties, especially our customers to whom we will be able to offer more meaningful and innovative products and services. This transaction, if concluded, would further enable Neotel to extend its footprint in South Africa and add the mobile capability that our customers require for their business’ growth in a new world of converged communications.”

Neotel is South Africa’s first converged communications network operator. It provides a range of value-added voice, internet and data services for businesses, wholesale network operators and providers and retail customers using its IP Next Generation Network, powered by Neotel’s fibre optic backbone.

It connects the major centres in South Africa to each other and to the world, directly linking its infrastructure into Tata Communications’ global tier I network.

(Edited by Joby Puthuparampil Johnson)

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