The South African mobile operator subsidiary of UK-headquartered Vodafone has announced an agreement to acquire the market’s second largest fixed communications provider, Neotel, in a cash deal worth ZAR7.0bn ($673m). Negotiations between Vodacom and Neotel were announced in September last year, when Vodacom CEO Shameel Joosub pledged to pump significant investment into the merged entity should talks prove fruitful.

Neotel launched in 2007 and runs services over more than 15,000km of fibre, more than half of which is in Johannesburg, Cape Town and Durban, Vodacom said. The firm also has access to 2 x 12 MHz of 1800 MHz spectrum, 2 x 5 MHz of 800 MHz spectrum and 2 x 28 MHz of 3.5 GHz spectrum, which Vodacom plans to use to accelerate its LTE rollout.

“The combined business will be ideally positioned to accelerate broadband connectivity in line with the South African Government’s broadband targets, enabling Vodacom to take a leading position in the fibre to the home and fibre to the enterprise segments of the market,” the company said in a statement.

Commenting on the deal, Joosub said: “Through the combination of these two businesses, the provision of a wider range of business services and much needed consumer services like fibre-to-the-business and fibre-to-the-home becomes a concrete reality – it will be good for the consumer, good for business and good for the country.  And for our investors, the transaction fits perfectly within the priorities of Vodacom’s growth strategy focused on continuing our investment in data and our Enterprise business.”

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