Neotel takeover rumour resurfaces
Mobile operators MTN and Vodacom are set to submit formal bids for the the purchase of telecoms operator Neotel this week, according to an article in the Sunday Times.
According to MyBroadband’s sources, Vodacom, MTN, and Dimension Data were all tipped to be bidding for the company, but Neotel has denied that it is for sale.
Dimension Data (through Internet Solutions), was previously rumoured to have fallen out of the bidding process.
Another well placed industry source previously confirmed the acquisition rumours, saying that the discussions between Neotel and MTN, and Neotel and Vodacom are at an advanced stage. He added that the discussions to date had been positive.
Neotel would be an attractive buy for companies such as Vodacom and MTN, partly because of its well-established fibre network and its valuable frequency spectrum.
Growth consulting company Frost & Sullivan said Neotel invested R5-billion over the past five years, while Strategy Worx put Neotel’s total investment since it started at R10-billion, reported the Sunday Times.
Neotel shareholding
Neotel’s current shareholders are Tata Communications (68.5%), Nexus Connection (19%) and Communitel (12.5%).
When Neotel was launched in August 2006 as South Africa’s second national operator (SNO), it had the following shareholders: Eskom Holdings (15%), Transtel (15%), Nexus Connexions (19%) and SEPCO (51%).
SEPCO was made up of the Tata Group of India, which held a 51% stake in SEPCO, and two private consortia, Communitel and Two Consortium.
Eskom Holdings, Transtel, and Two Consortium sold their stakes to Tata Communications, giving the Indian company a 68.5% stake in Neotel.
Tight lipped
It is understood that strict non-disclosure agreements prevent the parties from discussing the acquisition negotiations. The Sunday Times reached out to the companies mentioned, but received a ‘no comment’.
Neotel said that it is not company policy to comment on market rumour and speculation. “Neotel is experiencing good growth and will soon be announcing its results as well as the company direction for the next financial year,” it said.
Vodacom spokesperson Richard Boorman said that “we explore investment opportunities on a regular basis, but for obvious reasons I have to decline to comment on any specific companies”.
Nik Kershaw, executive for investor relations at MTN Group, said that “in line with internal corporate governance, as well as JSE requirements, MTN does not comment on market speculation”.
Dimension Data also did not comment on whether it was in discussions with Neotel as rumoured.
More on Neotel
Vodacom tight-lipped over Neotel rumour
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