Vodacom considering R5bn Neotel takeover

Vodacom, which is 65 percent owned by Vodafone Group and South Africa's largest wireless operator, is considering a reported takeover of Indian-owned Neotel.

Neotel, of which Tata Communications owns 68.5 percent, could give JSE-listed Vodacom a foothold in the lucrative fixed-line data and telecommunications market.

The other stakeholders include Nexus Connexion which owns 19 percent and Communitel which holds 12.5 percent stake.

Neotel, previously SNO Telecommunications, is the second national operator for fixed line telecommunication services in South Africa.

The deal, reported by Bloomberg, would see Vodacom pay R5 billion for the firm.

"Vodacom is increasingly focused on small- to medium-sized business customers and expanding data services to offset declining revenue from its domestic voice division. Neotel said in May that its corporate customer base rose 29 percent for the full year, driven by growth in managed and network services," Bloomberg reported. "Mobile operators are turning increasingly to fixed-line assets that allow them to sell a wider range of services and carry data traffic more efficiently," it added.

For the year ended March 31, Neotel recorded a net loss of $45.9 million.

Image: © Neotel

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