Vodacom and the shareholders of Neotel have confirmed long-standing rumours by announcing today that the two companies are in exclusive discussions regarding a potential acquisition of 100% of Neotel's shares.
Vodacom says the finalisation of the transaction is subject to the successful conclusion of commercial negotiations and receiving the requisite regulatory and corporate approvals.
"This transaction, if concluded, would stimulate greater competition in the South African fixed telecommunications sector and will accelerate the provision of high-speed data links. It would also result in the combined entity being able to offer an expanded product range and, as a consequence, enhanced customer choice."
Vodacom CEO Shameel Joosub says there are a number of crucial steps that still need to be completed before the transaction sees conclusion. "If the deal is implemented, Vodacom intends to put significant investment into the combined entity to provide high-speed fixed connectivity to many more businesses and consumers.
"By further building on the capabilities within Neotel, we would also aim to develop entirely new services such as fibre to the home and business." Joosub notes that Neotel - SA's second fixed-line operator introduced in 2006 - has access to over 15 000km of fibre-optic cable, including 8 000km of metro fibre in Johannesburg, Cape Town and Durban.
Confirming what many analysts previously tagged as a significant benefit for Vodacom should it acquire Neotel's network, Joosub says spectrum is also an important consideration. "The combined entity could use this resource more efficiently, and in doing this we can keep pace with SA's rapidly growing demand for mobile data."
Neotel CEO Sunil Joshi says the potential transaction presents an "attractive opportunity" for all parties, Neotel's customers in particular. "This transaction, if concluded, would further enable Neotel to extend its footprint in SA and add the mobile capability that our customers require for their business growth in a new world of converged communications."
Vodacom says, if completed and approved, the transaction will support government's ICT priorities to increase investment in the next generation of telecommunications services and facilitate growth in the broader economy.
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