The deal is reportedly valued at about Rs.3,130 crore

British major Vodafone’s South African subsidiary Vodacom, on Monday, said it had entered into exclusive discussions regarding a potential acquisition of Neotel, controlled by Tata Communications.

“There are a number of important steps that we still need to complete to conclude the transaction. 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,” Vodacom Group CEO Shameel Joosub said in a joint statement.

Neotel, South Africa’s second-biggest fixed-line phone operator, is 68.5 per cent owned by Tata Communications.

The company, which was established as South Africa’s second fixed-line operator, competes with former state-owned service provider Telkom.

Neotel reported a revenue growth of 12 per cent in FY’13. Tata Communications Chairman Subodh Bhargava too has confirmed that the companies are in talks.

“We have engaged in dialogue with Vodafone in South Africa...the process is just initiated so at this point I don’t think there is anything more one can say,” Tata Communications Chairman Subodh Bhargava told PTI on the sidelines of an event.


The deal is reportedly valued at $500 million (about Rs.3,130 crore) but the companies have not mentioned an amount so far.

“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. Neotel has access to over 15,000 km of fibre-optic cable, including 8,000 km of metro fibre in Johannesburg, Cape Town and Durban,” Mr. Joosub said.

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