Vodacom eyes Neotel takeover

Operator group Vodafone’s African subsidiary Vodacom has announced that it has entered into exclusive discussions regarding a potential acquisition of South African fixed line provider Neotel.

Vodacom South Africa is eyeing 100 per cent of the shares in Neotel, which is majority owned by Indian firm Tata Communications.

The two said in a joint statement that the transaction, if concluded, would stimulate greater competition in the South African fixed telecommunications sector and will accelerate the provision of high speed data links. It would also result in the combined entity being able to offer an expanded product range and, as a consequence, enhanced customer choice, the firms said.

The move forms part of a recent drive by Vodafone to enter the fixed line market. The operator group acquired British multinational fixed line firm Cable and Wireless Worldwide in July last year, and recently announced its intention to acquire German fixed line player Kabel Deutschland; a deal that European Commission gave its approval to last week.

Commenting on the acquisition, Vodacom Group CEO Shameel Joosub said: “There are a number of important steps that we still need to complete in order to conclude the transaction. If the deal is implemented, Vodacom intends to put significant investment into the combined entity to provide high-speed fixed connectivity to many more businesses and consumers.

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He added that Vodacom would also aim to develop entirely new services to complement Neotel’s existing offering, such as fibre to the home and business. Neotel has access to over 15,000km of fibre-optic cable, including 8,000km of metro fibre in Johannesburg, Cape Town and Durban.

“Spectrum is also an important consideration as the combined entity could use this resource more efficiently, and in doing this we can keep pace with South Africa’s rapidly growing demand for mobile data. This transaction is all about providing greater choice and better infrastructure for South Africa’s businesses and consumers.”

Neotel CEO Sunil Joshi said that he believes the acquisition presents “an exciting and attractive opportunity” for all parties, especially Neotel customers.

“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,” he said. “If completed and approved, this transaction will support Government’s ICT priorities to increase investment in the next generation of telecommunications services and facilitate growth in the broader economy.”