Liquid Telecom acquires South African operator Neotel for $430 million

Liquid Telecom has confirmed the acquisition of South Africa’s second largest fixed line operator, Neotel, for roughly $430 million.

The deal will see Liquid, which is owned by African telecoms group Econet Wireless Global, acquire a majority stake in Neotel of 70% with investment group Royal Bafokeng Holdings (RBH) acquiring the remaining 30%.

Liquid already runs extensive operations across Africa in fixed broadband and B2B telecoms, so the acquisition of Neotel adds to its already-deployed 24,000 kilometres of cross-border, metro and access fibre networks. To date, Liquid operates in 12 countries across the continent, and its latest purchase helps it make more of a concerted effort into consumer markets as well as its B2B arm. Neotel runs its own network infrastructure which will fall straight into the Liquid portfolio.

“We are excited about this transaction,” said Liquid Telecom CEO Nic Rudnick. “Leveraging the strengths of RBH, Neotel and Liquid Telecom will offer an unprecedented fibre network with a unique set of services and international connectivity for telecom operators and enterprises across sub-Saharan Africa. For the first time, African companies will be able to connect with each other in a cost effective and reliable way, all on a single fibre network. We will also be increasing investments into Neotel to cater for rapidly accelerating mobile and enterprise traffic, enabling us to launch exciting new products and services.”

Tata Communications is the existing majority shareholder of Neotel, alongside Nexus Connexion, and its CEO Vinod Kumar reckons now is the right time for Tata to exit the South African Market and hand over the ownership of its assets to Liquid.

“Liquid Telecom is the right partner for the next phase of Neotel’s evolution,” he said. “Convergence of technologies and services will be the key driver of growth across the globe and this transaction will encourage inclusion and support the growth aspirations of the African continent. We believe that Liquid Telecom will deliver on the vision of a well-connected Africa, which will auger well for the South African telecom industry and Neotel’s customers.”

The deal is subject to regulatory approval, but considering it won’t involve market consolidation or a reduction in the number of players, it is likely the South African regulator, ICASA, will give the deal the thumbs up.