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Neotel faces Competition Tribunal


Johannesburg, 19 Mar 2008

Today Neotel faces the Competition Tribunal, as it seeks to clear the last hurdle to acquire the business of Transtel, the commercial telecommunications arm of state-owned entity Transnet.

The Competition Commission has already unconditionally approved the transaction, which Neotel previously said was worth R230 million in cash.

Noetel spokesman Fani Zulu says the hearing is a normal part of the transaction process. "The Competition Tribunal's point of departure is to look at the recommendations made by the Competition Commission. If they have other issues they would like to question Neotel about, we will answer them."

Zulu would not be drawn on the value the Transtel acquisition brings to Neotel's business and its product offering.

However, Neotel MD Ajay Pandey said, when the deal was announced in April last year, that Transtel brings the second national operator a long-distance infrastructure, which includes fibre, a national footprint and an enterprise customer base.

The national footprint includes 100 locations nationwide and a skills base made up of about 500 staff members, he said.

The existing customer base was said to generate in excess of R400 million a year, and included Transtel's holding company Transnet as a client.

It is now understood that, following the approval of the acquisition, Transnet will enter into a master service agreement with Neotel, in which the second national operator will be appointed as the sole and exclusive provider of electronic communications services to Transnet for a period of five years.

Previously, Karl Socikwa, head of restructure at Transnet, said its disposal of Transtel was part of the group's non-core business disposal strategy.

Transnet is focusing on the deployment, operation and maintenance of an efficient freight transport business, he said.

Related story:
Neotel buys Transtel for R230m

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