Tata sells African telco to Vodacom for $ 676m

Tata Communications will sell Neotel to British telecom major Vodafone’s South African subsidiary Vodacom for 7 billion rand ( around $ 676 million).

Neotel, South Africa’s second- biggest fixed- line phone operator, is 68.5 per cent owned by Tata Comm. This deal gives Vodacom a large fibre optic network for highspeed internet.

“The shareholders of Neotel and Vodacom SA have announced on Monday that they have favourably concluded an agreement on the commercial structure and terms to proceed for Vodacom to acquire 100 per cent of the shares of Neotel valued at an enterprise value of ZAR 7.0 billion. This follows the announcement late last year that the parties were entering into exclu- sive talks for a due diligence,” said Tata Communications in a statement.

“Tata Communications is pleased with the outcome of this deal. It is in line with our financial objectives while paving the way for Neotel to improve its value proposition in the South African market,” said Vinod Kumar, MD and CEO, Tata Communications. The structure of the deal and its commercial terms remain subject to regulatory and competition authority approvals and the parties will be immediately commencing the necessary processes in that regard, said Tata Communications.

“We are encouraged at the progress made to date and will focus now on ensuring compliance with the regulatory approvals processes and the engagement with the

competition authorities. Neotel continues to grow in the South African market and with

this, when approved, will enable a greater choice of products and services for our customers and increased competition, while Neotel continues to deliver improved services and grows its customer base," said Sunil Joshi, the managing director and chief executive officer of Neotel.