Tata Communications’ plan to sell its stake in its South African subsidiary Neotel to Vodacom is being held up as communications regulator Icasa mulls whether or not to allow the transfer of radio frequency spectrum to the mobile operator.
That’s according a report in The Economic Times on Monday. The Indian newspaper, quoting three unnamed people “familiar” with the situation, said Icasa is considering taking away Neotel’s spectrum if the company is sold to Vodacom, which is a subsidiary of UK-headquartered telecommunications giant Vodafone.
Quoting an unnamed source, The Economic Times said approval from Icasa for the transfer of the spectrum was the “only issue delaying the deal as all other modalities were finalised as early as December”.
Neotel has access to spectrum in a number of frequency bands, including the coveted 1,8GHz band, which is well suited to deploying next-generation 4G/LTE broadband networks. Until now, Vodacom (and its rivals) have had to reallocate spectrum traditionally used for voice services to provide 4G services. They need access to additional spectrum to build out these services further.
An Icasa spokesman was not immediately able to confirm or deny whether the authority had received an application from either Vodacom or Neotel for the transfer of the spectrum, but promised to reply soon. TechCentral will update this article as soon as this information is furnished.
Last week, the Wall Street Journal reported that Vodacom intends tabling an offer of US$460m (about R5bn) to buy Neotel. Quoting an unnamed executive at India’s Tata Communications, the newspaper said that Vodacom will also take on Neotel’s debt, effectively pushing up the price further.
Tata Communications is in talks to sell Neotel because it is not able to fund the local operator’s expansion into broadband and mobile, it said. Details of the deal should be announced in the next two months, it added, quoting the Tata executive.
It’s understood Vodacom views access to Neotel’s spectrum as key to the transaction. But MTN, which competes with both companies, recently expressed the view that such a transfer of spectrum would not be allowed under current South African legislation.
In February, Neotel CEO Sunil Joshi told TechCentral in an interview that the talks with Vodacom were nearing completion and that details of the acquisition could be announced in a matter of weeks. — (c) 2014 NewsCentral Media