Vodacom, which this morning bid R7 billion for SA's second national operator, does not intend incorporating Neotel into the rest of its business offerings.
Instead, the mobile operator will merge its fixed (fibre) enterprise business with Neotel, says CEO Shameel Joosub. He was addressing analysts and media at the company's annual results presentation this morning.
Vodacom anticipates that merging these two units will create a R5 billion-a-year business. In the six months to September, Neotel turned over around R1.8 billion and reported earnings before interest, tax, depreciation and amortisation of R470 million.
Joosub says Vodacom will, therefore, not transfer Neotel's spectrum from the company to itself.
The deal still has to be approved by the Competition Commission as well as Independent Communications Authority of SA, but is expected to be completed by the end of next March.
Other solutions
Neotel MD and CEO Sunil Joshi says the parties "are encouraged at the progress made to date and will focus now on ensuring compliance with the regulatory approvals processes and the engagement with the competition authorities".
"Neotel continues to grow in the South African market and with this, when approved, will enable a greater choice of product and services for our customers and increased competition, while Neotel continues to deliver improved services and grows its customer base."
Joosub says its bid to buy Neotel, like MTN's agreement with Telkom that a joint venture would be established to provide base stations to both operators, is a necessary move as networks are "choking" and need more spectrum.
The state has yet to allocate space in the 2.6GHz range, while more frequency in the 800MHz space will only be allocated once broadcasters have moved to digital television, a process that seems to have stalled. Mobile operators want to gain access to this frequency, because it is ideal for rolling out long-term evolution in rural areas.
Joosub adds that Vodacom is also looking at other potential solutions, such as using television white spaces. "We need to make a plan."
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