Is Neotel going up for sale?

June 30, 2013 • Mobile and Telecoms, Top Stories

South African fixed-line operator Neotel sprung into business in 2006, but with only 152 000 subscribers, it has failed to make an impact in the South African telecommunications market – competing directly with parastatal Telkom.

Sunil Joshi, MD & CEO of Neotel. (image source: Charlie Fripp)

According to Business Day, two of South Africa’s largest mobile service providers, MTN and Vodacom, are rumoured to be in talks with Neotel about a possible buy-out. “Formal bids to buy the fixed-line operator were due in this week, according to well-placed market sources, despite watertight non-disclosure clauses keeping a tight lid on the process,” the publication wrote.

While Neotel has denied the possibility of being bought out by interested parties, it has also been noted that Internet service provider Dimension Data’s Internet Solutions will also be throwing their bidding hat into the ring.

“Neotel has invested heavily in building its own infrastructure, which presents an attractive proposition, especially for those companies competing in the enterprise market,” said Gareth Mellon, Frost & Sullivan ICT senior industry analyst.

Frost & Sullivan research analyst Masego Mbaakanyi said that MTN and Vodacom will be better suited to take over Neotel.

“Dimension Data wants to position itself as an integrated service provider, so they may be tempted to buy out Neotel in order to offer end-to-end solutions, including fixed-line services. However, Vodacom and MTN will be better candidates for Neotel because they are all telecom operators. They have robust expertise in telecommunications services.”

Charlie Fripp – Consumer Tech editor

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