South African mobile operator Vodacom is said to be readying an offer of $460-million for rival operator Neotel. Vodacom is partly owned by Vodafone, while Neotel’s majority stakeholder is India’s Tata Communications.
According to a report in the Wall Street Journal, Neotel comes with some debt on its books, so if the deal gets finalized, Vodacom would inherit that debt as well.
Given as a reason for the sale, Tata Communications confirmed that they could no longer afford to fund Neotel’s expansion into broadband and mobile – hence the offloading of the operator.
While nothing has officially been confirmed, a Neotel executive said that details would be revealed in the coming months. “We expect to make a commercial announcement in the next two months,” the executive said on conditions of anonymity.
According to the Wall Street Journal, “for the Vodafone Group, the acquisition will strengthen its foothold in South Africa— one of the most high-growth telecommunications markets in the world—by adding high-paying corporate customers on top of its existing cellular subscribers.”
Tata Communications and Vodacom entered into an exclusive discussion for the acquisition late last year, and is expected to sign a share purchase agreement after which it will then seek approval from government.
Charlie Fripp – Consumer Tech editor