Icasa approves Vodacom’s R7bn purchase of Neotel

Published Jun 17, 2015

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John Bowker and Chris Spillane

VODACOM Group’s R7 billion offer to buy broadband provider Neotel has been approved by the communications regulator.

The Independent Communications Authority of SA (Icasa), which had been deliberating the proposal for about a year, would allow the company to proceed with the deal, the regulator’s chairman Stephen Mncube said on Monday.

He said the takeover would be subject to compliance with a local ownership law and adherence to terms of the roll-out of broadband infrastructure and services.

“We will work with Icasa to finalise the conditions of the approval,” Vodacom said.

Vodacom shares pared declines and were 1 percent lower at R133.21 at the close on Monday, having been as much as 2.3 percent down earlier. The company is valued at about R198bn.

Vodacom, 65 percent owned by Newbury, England-based Vodafone Group, agreed to buy Neotel from Tata Communications of India in May last year.

The deal would enable Vodacom to extend internet services for small- to medium-sized businesses. The company has the most cellular phone subscribers in Africa’s most industrialised economy.

Competitors including MTN Group, Africa’s biggest wireless operator, and Cell C have previously said that they oppose the purchase because they say Vodacom will become too dominant.

“The Competition Commission has yet to rule on the deal,” a spokesperson for Cell C said.

“Nothing official had been issued by Icasa and we would respond once they have.”

A spokesman for MTN was not available for comment.

The condition related to South Africa’s ownership laws would ensure Neotel was about 30 percent owned by groups deemed to be historically disadvantaged, Mncube said.

He added that the details of the clause were open to negotiation. The country’s empowerment laws are designed to help black people to get ahead in business.

The terms of Vodacom’s roll-out of broadband were also still to be determined, Mncube said.

The ruling ANC has pledged to extend broadband access to every household by the end of this decade. – Bloomberg

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