Johannesburg - Liquid Telecom, majority owned by Econet Wireless Global, agreed to pay R6.55 billion ($428 million) to Tata Communications for South African Internet-service provider Neotel to create the continent’s largest broadband network and business-to-business telecommunications service.
The buyer is partnering with Royal Bafokeng Holdings, a South African empowerment investment group, which has committed to taking a 30 percent stake in Neotel, according to a statement from Mumbai-based Tata Communications, which acquired a controlling stake in Neotel in 2009.
The deal gives Econet wireless spectrum and broadband access to South African businesses and homes. The company, founded and run by Strive Masiyiwa, controls Africa-focused Internet provider Liquid Telecom and mobile-phone company Econet Wireless Zimbabwe.
For Tata, a transaction would advance an asset-sale push the coffee-to-cars conglomerate has been pursuing as Chairman Cyrus Mistry seeks to pare debt and boost profit. Tata Steel, Tata Power Company and Indian Hotels Company, which wants to sell its Taj Boston hotel, are among group firms looking to dispose of non-core assets.
Four months ago, Johannesburg-based Vodacom Group abandoned a R7 billion proposal to buy Neotel after almost two years of regulatory battles and legal opposition to the deal by competitors.
* With assistance from George Smith Alexander
BLOOMBERG