Vodacom Close to Announcing Deal to Buy Landline Operator, Neotel
Published on: 5th Mar 2014
By: Ian Mansfield
South Africa's Vodacom is said to be close to a deal that will see it buy a majority stake in the country's second landline network operator Neotel.
Vodafone has long been expected to make a bid for the company, but talks with its owners, India's Tata Communications are reported to have come much closer to an agreement.
Brokerage house, Religare wrote in a research note that the Neotel sale negotiations were "largely complete and the deal is in final stages."
Tata initially bought a 25% stake in Neotel for USD250 million in 2006, and has since raised its holding to 67.3 percent.
Neotel is expected to be worth around USD500 million, and will give Vodacom both a landline operation to sell bundled services to its customers and the ability to reduce its reliance on Telkom for mobile traffic backhaul.
Neotel also has its own newish LTE network and radio spectrum.
The deal is still subject to regulatory clearance though. South Africa's Wireless Access Providers' Association (WAPA) has already said that it will oppose the deal. WAPA and many of its members have a commercial relationship with Neotel.