Tata Comm agrees for Liquid Telecom to acquire Neotel

The Dollar Business Bureau

Tata Communications Ltd. on Tuesday announced it has signed a new agreement to sell its South African telecom arm Neotel (Pty) Ltd. to another African company.

Earlier another proposed deal of the Indian company with a subsidiary of Britain’s Vodafone Group came unstuck.

Neotel will be acquired by Liquid Telecom, a subsidiary of the privately held Econet Wireless Global, in a deal worth $428 million (ZAR6.55 billion or Rs.2,900 crore). Tata Communications, which owns around 67% of the firm, will get around $285 million (Rs.1,938 crore), the Indian company said in a statement. 

 This is Tata Communications Ltd.’s second stake sale deal in as many months. Earlier in May, the company had agreed to sell a majority stake in the data centre business segment to Singapore Technologies Telemedia for around $635 million including debt. 

“Convergence of technologies and services will be the key driver of growth across the globe and this transaction will encourage inclusion and support the growth aspirations of the African continent,” said Vinod Kumar, managing director and CEO, Tata Communications.

Neotel, the second-largest fixed telecommunications services provider for both businesses and consumers in South Africa, has its one-third stake owned by minority shareholders led by Nexus Connection.

Nexus operates data centres in Cape Town and Johannesburg, while it connects to other major South African cities via five undersea cables.

The transaction, which is subject to customary approvals, will create the largest pan-African broadband network and B2B telecom provider, the company said.