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South Africa's Vodacom Pays $676 Million for Landline Network

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South Africa's Vodacom has announced that it is buying the country's second largest landline operator, Neotel in a deal that values the company at around USD676 million.

Vodacom said that it will fund the acquisition through available cash resources and existing credit facilities.

The company was majority owned by India's Tata, who initially bought a 25% stake in Neotel for USD250 million in 2006, and has since raised its holding to 67.3 percent. The two other shareholders, Nexus Connection and Communitel have also agreed to sell their stakes.

Vodacom added that it will benefit from Neotel's extensive fibre assets and enterprise capabilities which will allow Vodacom to accelerate its fixed enterprise strategy and stimulate greater competition in the South African fixed telecommunications sector.

Neotel 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.

The transaction is expected to close before the end of the current financial year.

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.

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Tags: vodacom  neotel  South Africa