Neotel sale – MTN, Vodacom bids in this week: report
The Sunday Times reported today (30 June 2013) that formal bids for the purchase of Neotel had to be submitted this week.
While Neotel denies that it is for sale, the newspaper cited well placed industry sources saying that Vodacom and MTN are in advanced discussions to acquire the company.
MyBroadband previously reported that Vodacom and MTN were the frontrunners to acquire Neotel after Dimension Data dropped out of the negotiations.
Well-placed sources confirmed the negotiations to MyBroadband, but because of strict non-disclosure agreements more details could not be divulged.
Neotel would be an attractive buy for companies such as Vodacom and MTN, partly because of its well-established fibre network and its valuable frequency spectrum.
Research company Frost & Sullivan told the Sunday Times that Neotel has invested R5-billion over the past five years, while Strategy Worx put Neotel’s total investment since it started at R10-billion, reported the Sunday Times.
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. The Sunday Times contacted for comment the companies mentioned, but the response echoed earlier statements – no comment.
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.
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