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India’s Tata brokers new deal to exit its South African operation.
Tata Communications and minority shareholders have agreed to sell South African operator Neotel to Liquid Telecom for 6.55 billion rand (€390 million), it announced on Tuesday.
Under the terms of the deal, Liquid Telecom will partner with South African empowerment investment group Royal Bafokeng Holdings (RBH), which will take a 30% stake in Neotel.
The deal is subject to regulatory approvals, but Tata said it expects it to close before the end of the current financial year.
Regulatory objections derailed Tata’s previous attempt to sell Neotel, South Africa’s second national operator.
The Indian group agreed to sell Neotel to Vodacom for ZAR7 billion in May 2014, but rival operators objected to the deal on competition grounds.
In a bid to win over regulators, Tata and Vodacom restructured the terms of their agreement to specifically exclude Neotel’s mobile spectrum – which many felt would give Vodacom an unfair advantage – and to include the offer of roaming rights to all other mobile operators in the country.
However, it wasn’t enough and in March the deal collapsed, "due to regulatory complexities in concluding the transaction as well as certain conditions not being fulfilled," Vodacom said.
The Liquid Telecom deal is more likely to find favour with regulators. The company is building out a fibre network in Africa, reaching nine countries at present, and provides international connectivity, IP transit, and wholesale metro network connectivity, as well as fibre-based broadband services to business customers. It is owned by Econet Wireless Global.
"Leveraging the strengths of RBH, Neotel and Liquid Telecom will offer an unprecedented fibre network with a unique set of services and international connectivity for telecom operators and enterprises across sub-Saharan Africa," Liquid Telecom CEO Nic Rudnick said, in a statement.
"We will also be increasing investments into Neotel to cater for rapidly accelerating mobile and enterprise traffic, enabling us to launch exciting new products and services," he added.
