Tata Communications sells Neotel to Africa’s Liquid Telecom

June 28, 2016

The transaction, which will be worth South African Rand 6.55 billion, will create the largest pan-African broadband network

Tata Communications Ltd has entered into an agreement to sell its South African telecom unit Neotel Pty Ltd to Liquid Telecom Group, run by Liquid Telecommunications Holdings Ltd of Africa, for South African Rand 6.55 billion.

Liquid Telecom, majority owned by Econet Wireless Global, is partnering with Royal Bafokeng Holdings (RBH), a South African empowerment investment group, which has committed to take a 30% equity stake in Neotel.

A proposed deal by Tata Communications with Vodacom SA to sell Neotel had lapsed citing regulatory complexities in March. On 10 December, Tata Communications said that it will sell the fixed-line assets of Neotel to Vodacom, a unit of Vodafone Group Plc, in a revised deal that excludes Neotel’s wireless spectrum and licences. The deal was hanging fire for more than two years in protracted negotiations.

“The transaction, which is subject to obtaining all affirmative approvals and other corporate approvals that may be required by the shareholders of Neotel and other regulatory approvals, is transformative and will create the largest pan-African broadband network and B2B telecoms provider. Through a single access point, businesses across Africa will be able to access Liquid Africa’s 24,000km of cross-border, metro and access fibre networks. These currently span 12 countries from South Africa to Kenya, with further expansion planned,” Tata Communications said.

The transaction is subject to approval by South African regulatory authorities and is expected to be completed later this financial year. This move would have may also help Tata Communications pare its debt of Rs.9,595.22 crore as on 30 September 2015.

Nic Rudnick, Liquid Telecom’s chief executive officer, said the company is excited about this transaction.

“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,” Rudnick said.

Vinod Kumar, managing director and chief executive officer, Tata Communications, said Liquid Telecom is the right partner for the next phase of Neotel’s evolution.

“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 augur well for the South African telecom industry and Neotel’s customers,” Kumar said. Source: Live Mint