Vodacom in talks to revise structure of Neotel deal


Vodacom is in discussions with Neotel and its shareholders to explore a revised transaction structure. By Gugu Lourie

The South African biggest mobile phone operator is in a process of buying Neotel for R7 billion from its parent company Tata Communications.

The Competition Tribunal was set to hear Vodacom’s application for the acquisition of Neotel between today, 23 November 2015, and 11 December 2015. But the tribunal has agreed on the weekend to postpone a hearing into the proposed R7bn Vodacom-Neotel merger.

Vodacom informed investors on Monday that it was in discussions with Neotel and the shareholders of Neotel to explore a revised transaction structure.

“The outcome of these discussions will directly impact the extent of the approval being sought from the Competition Tribunal and the scope of the Competition Tribunal hearing. Accordingly, Vodacom South Africa and Neotel have requested that the hearing be postponed. The details applicable to the postponement are to be determined at Competition Tribunal hearing in Pretoria today. Shareholders will be advised accordingly of the outcome”

Launched in 2006 to compete with Telkom, Neotel owns a lucrative 800MHz spectrum, which is at the heart of concerns raised about the pending Vodacom-Neotel deal.

However, the deal is being opposed by rivals Telkom, MTN and Cell C.

ICASA’s decision to approve the proposed transaction has also been taken on review in the High Court by Telkom, MTN, Cell C and Dimension Data.

Vodacom, which is owned by British mobile phone giant Vodafone, is keen to see the deal being finalised by 11 December so that it can aggressively roll out its fibre-to-the-home (FTTH) and fibre-to-the-business (FTTB) services.

In the meantime, Joosub told Business Day newspaper that Vodacom will seek certain guarantees and securities from Tata Communications to cover any potential liabilities that may arise from its acquisition of Neotel following fraud allegations at the fixed-line company.

The Mail & Guardian reported in July that Neotel paid R66m — allegedly in kickbacks — from April last year to February this year to a company called Homix to secure a R1.8bn contract to provide network-related services to Transnet.


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