India’s Tata Communications is putting on a brave face after Vodacom announced on Tuesday that it was walking away from a R7bn deal to acquire Tata’s South African subsidiary Neotel.
In a letter to shareholders on Tuesday, Tata Communications said it “remains committed to its investment in Neotel”. It said, too, that it is committed to “focus on customers, partners and employees in South Africa and providing the highest levels of customer service”.
The letter, signed by Tata Communications company secretary Manish Sansi, repeated Vodacom’s statement, issued on the JSE’s stock exchange news service, that the deal between Vodacom and Neotel has “lapsed due to regulatory complexities in concluding the transaction as well as certain conditions not being fulfilled”.
It did not spell out what those conditions were.
Tata Communications holds 70,5% of Neotel, with the remaining shares held by CommuniTel (10,5%) and by black economic empowerment shareholder Nexus Connexion (19%).
In a statement, Neotel said it agreed with Vodacom that the “right commercial and technical solution was not feasible within the current regulatory environment”.
“Neotel will build on the successes it has achieved by continuing to invest in its network and infrastructure and by growing its customer base, especially in high-value and opportunity segments such as business to business,” it said.
Neotel has been without a full-time CEO since mid-2015 following the suspension of Sunil Joshi. Joshi stepped down in December, five months after being suspended pending a board-led investigation into alleged corruption in a deal involving Transnet.
His resignation came less than two weeks after Neotel’s chief financial officer, Steven Whiley, who had also been suspended pending the board investigation, announced he was stepping down.
Joshi and Whiley were placed on “special leave” at the end of July following publication of a report in the Mail & Guardian that said Neotel may have made dodgy payments to a company called Homix in order to secure a telecommunications contract worth R1,8bn from state-owned Transnet.
Neotel said both men complied fully with the investigation.
In its statement on Joshi at the time of his resignation in December, the company said: “As a result of the investigation and with the information available to the board relating to the Homix transaction, the board has found nothing to date that implicates Mr Joshi personally in any bribery or corruption activities.”
When it announced Whiley’s resignation on 27 November 2015, Neotel said its former finance chief “at all times acted with integrity”. He left the operator’s employ on 30 November.
Tata Communications’ share price closed up by 0,6% in trading on the Bombay Stock Exchange on Tuesday. Vodacom’s share price was also up by 0,6% shortly before midday in trading on the JSE. — (c) 2016 NewsCentral Media
