Vodacom-Neotel deal six months away

Sunil Joshi, MD & CEO of Neotel says that a deal between the fixed line operator and Vodacom could be concluded in six months.

Vodacom and the shareholders of Neotel confirmed on 30 September, that they had entered into exclusive discussions regarding a potential acquisition of 100% of the shares of Neotel by Vodacom SA.

In announcing the group’s results for the half year period ended September 2013, in Midrand, Joshi said that due diligence is currently under way with the deal is possibly six months away from being concluded.

Joshi said that a combined entity would enable incremental funding for a stronger foothold in the South African landscape for Neotel.

“A combined entity would be better-placed to offer an expanded product range and level of increased funding and, as a consequence, enhanced customer choice as well, while enabling Neotel to extend its footprint in South Africa.”

A deal between Vodacom and Neotel could be valued at as much as R10 billion rand ($994 million) according to a report in Bloomberg, citing a person close to the negotiations.

In a Q2 FY14 Investor Fact Sheet, Neotel’s majority shareholder Tata Communications put Neotel’s net debt  at R4.946 billion as at September 30, 2013, up from  R4.918 billion in June 2013.

Gross debt amounted to R5,09 billion, from  R5.1 billion before.

Vodacom

Speaking about the transaction, Vodacom Group CEO Shameel Joosub has said “There are a number of important steps that we still need to complete in order to conclude the transaction. ”

“If the deal is implemented, Vodacom intends to put significant investment into the combined entity to provide high-speed fixed connectivity to many more businesses and consumers.”

“By further building on the capabilities within Neotel, we would also aim to develop entirely new services such as fibre to the home and business. Neotel has access to over 15,000km of fibre-optic cable, including 8,000km of metro fibre in Johannesburg, Cape Town and Durban,” Joosub said.

“Spectrum is also an important consideration as the combined entity could use this resource more efficiently, and in doing this we can keep pace with South Africa’s rapidly growing demand for mobile data. This transaction is all about providing greater choice and better infrastructure for South Africa’s businesses and consumers,” he said.

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Vodacom-Neotel deal six months away