Neotel would remain as a standalone business, operating as a subsidiary of Vodacom, should a deal between the two telcos go through the necessary regulatory approvals.<\/p>\n
South Africa’s largest mobile operator by subscribers, Vodacom on Monday (19 May, 2014) said it reached an agreement to acquire 100% of the issued share capital in, and shareholder loans against Neotel for a total cash consideration of R7 billion.<\/p>\n
Speaking at the group’s financial results presentation in Midrand, Vodacom CEO Shameel Joosub said that Neotel, as a combined fixed enterprise business, will create a service provider with annual revenues of over R5 billion.<\/p>\n
Vodacom estimates revenue synergies with a total net present value of approximately R900 million, after integration costs.<\/p>\n
Joosub said that that terms of the deal with Neotel were concluded at a very late hour, the day before the group’s results presentation.<\/p>\n
“We want to keep Neotel as a standalone business, and integrate our fixed business, effectively into Neotel’s,” Joosub told BusinessTech.<\/p>\n
“We want to create the focus in Neotel, we don\u2019t want it to be overpowered by the mobile business. We are not trying to shut the company (Neotel) down.”<\/p>\n
No spectrum, no deal?<\/strong><\/p>\n The transaction remains subject to the fulfillment of a number of conditions – including applicable regulatory approvals – and is expected to close before the end of the financial year.<\/p>\n One potential stumbling block is the question over the transfer of spectrum.<\/p>\n While Neotel will provide Vodacom with an already established fibre network, its access to valuable 800Mhz spectrum is seen as the big prize, as it is crucial for the further rollout of LTE.<\/p>\n Joosub said that, if the Competition Commission or regulator, Icasa, blocked the transfer of spectrum, \u201cwe would have to evaluate it at that particular point. I think there is value in the company itself. The big part in the valuation, or the big value in there, is obviously also the spectrum.”<\/p>\n “Mobile operators are choking, we need access to spectrum. If these types of consolidations don’t happen, then transformation in our country won’t happen,” Joosub said.<\/p>\nMore on Neotel and Vodacom<\/h3>\n