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Vodacom discusses final Neotel details

Johannesburg - Vodacom, South Africa’s largest wireless carrier, is negotiating final details for a deal to buy local Web-access provider Neotel from Tata Communications, two people familiar with the matter said.

An agreement has yet to be approved by Neotel’s lenders and board, said one of the people, who asked not to be identified because the talks are private.

File photo: Nadine Hutton. Credit: Bloomberg

The companies, which also need regulatory approvals, expect to complete the transaction in the first half, the other person said.

Vodacom, which said in September it had started exclusive talks to buy Neotel, is expanding in data services to offset declining revenue from its domestic voice division.

Buying Neotel would help Vodacom add Internet users as it competes against Telkom and MTN.

The transaction could be worth more than 5 billion rand, a person familiar with the discussions said in September.

Vodacom would assume about $500 million of debt, people familiar with the talks said in October.

Richard Boorman, a spokesman for Johannesburg-based Vodacom, and Tracy Cohen, Neotel’s chief corporate services officer, declined to comment.

Rozzyn Boy, a spokeswoman for India’s Tata Communications in London, said the talks between the companies are continuing , declining to comment further.

Once Vodacom has reached a deal, it will seek approval from South Africa’s communications regulator and competition commission, one of the people said.

Vodacom, which is 65 percent owned by Vodafone, is increasingly focused on small- to medium-sized business customers and adding data services.

Mobile operators are turning to fixed-line assets that allow them to sell a wider range of services and carry data traffic more efficiently.

Shares of Vodacom advanced 0.5 percent to 130 rand at 9:40 a.m. in Johannesburg.

Tata Communications rose 0.6 percent in Mumbai. - Bloomberg News

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