Neotel for sale – Vodacom, MTN looking to buy: sources

Industry speculation suggests that Neotel is for sale, and that Vodacom and MTN are the two frontrunners in the race to buy the company

By - May 16, 2013
Neotel Fibre

Industry speculation suggests that Vodacom and MTN are in separate discussions with Neotel to acquire the fixed line operator.

One industry source said that Vodacom, MTN and Dimension Data were all in discussions with Neotel to potentially acquire a controlling stake in the company. Dimension Data (through Internet Solutions), however, is rumoured to have fallen out.

Another well placed industry source confirmed the acquisition rumours, saying that the discussions between Neotel and MTN, and Neotel and Vodacom are at an advanced stage. He added that the discussions to date have been positive, and that a deal is definitely possible.

Neotel holds great value for Vodacom and MTN, partly because of its well-established fibre network and its valuable frequency spectrum.

Neotel shareholding

Neotel’s current shareholders are Tata Communications (68.5%), Nexus Connection (19%) and Communitel (12.5%).

When Neotel was launched in August 2006 as South Africa’s second national operator (SNO), it had the following shareholders: Eskom Holdings (15%), Transtel (15%), Nexus Connexions (19%) and SEPCO (51%).

SEPCO was made up of the Tata Group of India, which held a 51% stake in SEPCO, and two private consortia, Communitel and Two Consortium.

Eskom Holdings, Transtel, and Two Consortium sold their stakes to Tata Communications, giving the Indian company a 68.5% stake in Neotel.

All parties involved mum on the rumoured negotiations

It is understood that strict non-disclosure agreements prevent the parties from discussing the acquisition negotiations.

Neotel said that it is not company policy to comment on market rumour and speculation. “Neotel is experiencing good growth and will soon be announcing its results as well as the company direction for the next financial year,” the company added.

Vodacom spokesperson Richard Boorman said that “we explore investment opportunities on a regular basis, but for obvious reasons I have to decline to comment on any specific companies”.

Nik Kershaw, executive for investor relations at MTN Group, said that “in line with internal corporate governance, as well as JSE requirements, MTN does not comment on market speculation”.

Dimension Data also did not comment on whether it was in discussions with Neotel as rumoured.

More on Neotel

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