MTN has seemingly confirmed long-standing reports that Neotel has been in talks with industry players with regards to a possible sale.
MTN CEO Sifiso Dabengwa confirmed rumours that SA's first competitor to fixed-incumbent Telkom may be up for sale at the company's financial results presentation yesterday, saying it had gone through the process with respect to Neotel, and is not part of the talks now.
Reports of a possible sale of Neotel - six-and-a-half years after launching - have been doing the rounds for some time now, with speculation heating up over the past few months.
In June, the Sunday Times reported that formal bids for the purchase of Neotel had to be submitted within a week. SA's mobile duopoly, Vodacom and MTN, have been pegged as prime candidates for a takeover, while Dimension Data's Internet Solutions has also featured in industry talk on an upcoming sale of Neotel.
While Neotel has consistently denied the company is on the shelf, Vodacom is hesitant to speak specifics and Dimension Data says its policy dictates it does not comment on "rumours or speculation".
Vodacom spokesperson Richard Boorman recently commented: "We explore investment opportunities on a regular basis, but I have to decline to comment on any specific companies."
And, up until now, MTN echoed Dimension Data's company policy. Kanagaratnam Lambotharan, chief enterprise business officer at MTN, said last month: "In line with internal corporate governance, as well as JSE requirements, MTN does not comment on market speculation."
Attractive opportunity
Meanwhile, analysts have said there would be a number of benefits in it for the acquiring company, should the rumours ever come to fruition - including Neotel's substantial urban fibre infrastructure, and a powerful business customer base.
At the end of May, Neotel CEO Sunil Joshi reported the operator's core customer base - the enterprise sector - was up 29% year-on-year, while what he classifies as the company's consumer customers (small business and retail) had grown 52%.
Still marginal in comparison to Telkom's four-million-odd customers, Neotel's base of 3 000 business and 152 000 consumer customers, say analysts, would nonetheless significantly boost a company like Vodacom, or MTN.
Neotel, which has spent about R5 billion on infrastructure since inception, has access to about 12 000km of fibre, 6 500km of which is in metro areas. The operator also has space on all of SA's five submarine cables, which give it access to its majority shareholder Tata Communication's 365 000km of underwater fibre, connecting 300 cities in 200 countries across six continents.
Share