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Neotel brand to remain, for now

Paula Gilbert
By Paula Gilbert, ITWeb telecoms editor.
Johannesburg, 12 Jan 2017
Liquid Telecom believes the integration of Neotel will have an extremely positive impact and "brings to an end a period of uncertainty at Neotel".
Liquid Telecom believes the integration of Neotel will have an extremely positive impact and "brings to an end a period of uncertainty at Neotel".

The Neotel brand will be unchanged for the time being, even as Liquid Telecom prepares to finalise its R6.55 billion acquisition of the company.

"The Neotel brand will remain with a slight change for the current future, but there will be a slow transition into the Liquid brand," Liquid Telecom told ITWeb via e-mail.

In December last year, the Independent Communications Authority of SA gave its unconditional approval for Liquid Telecom to acquire Neotel, following approval from the Competition Commission in October.

Liquid announced in June that it had entered into an agreement to acquire Neotel for R6.55 billion. The pan-African telecoms company partnered with Royal Bafokeng Holdings, a South African investment group, which committed to take a 30% equity stake in Neotel.

Liquid now says the deal does not require any other additional regulatory approvals and the company expects the deal's financial close to occur during the next three months.

Liquid declined to comment on any definitive timelines for the merge, but says "the integration is expected to impact the business in an extremely positive way".

"It brings to an end a period of uncertainty at Neotel and opens up many new possibilities for the company to grow," it told ITWeb.

Part of the uncertainty came when a long-awaited R7 billion acquisition of Neotel by Vodacom was called off in March last year.

Liquid Telecom CEO Nic Rudnick previously said the combined companies will create an "unparalleled footprint covering key markets across the continent" and would give Liquid Telecom a significant competitive advantage through consolidated networks.

Liquid Telecom expects the deal to be finalised during the first quarter of 2017 and says that once closed, the deal represents a major opportunity to enter the South African market ? the largest in Africa ? with scale.

"Neotel's network perfectly complements Liquid Telecom's existing footprint across Eastern, Central and Southern Africa. It significantly strengthens Liquid Telecom's service offering to both wholesale and enterprise customers, providing additional scale and reach into profitable market segments.

"Strong revenue growth is expected by leveraging the people, the management, the skills, the assets and the intellectual property of the combined entity," Liquid adds.

Leadership structure

In terms of leadership, Liquid would not divulge any specifics but says it is "working on putting together an experienced team".

"Neotel will be able to draw on Liquid Telecom's management's skills and experience operating within the African continent to enhance systems, processes and operations within Neotel's various operations," Liquid added.

Neotel has been without a permanent chief executive or chief financial officer since August 2015 when then CEO Sunil Joshi and CFO Steven Whiley were placed on "special leave" pending an investigation into alleged bribery and corruption in connection with a Transnet deal worth R1.8 billion. Non-executive director Kennedy Memani has been providing interim executive oversight since then.

Whiley resigned in November 2015 and at the time the board said it was satisfied he had "at all times acted with integrity". Joshi then resigned in early December 2015 "to pursue his own interests". When he resigned, the Neotel board said it had found nothing to date that implicated Joshi personally in any bribery or corruption activities.

Liquid also reiterated what Rudnick had told ITWeb last November ? that it does not anticipate any job losses at Neotel after the takeover.

"This is not a cost-cutting exercise. We're expecting this transaction will create additional skills and growth opportunities as the combined business grows."

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