An announcement regarding the mooted acquisition by Vodacom of Neotel could be made within the next couple of weeks, with due diligence nearing completion.
That’s the word from Neotel CEO Sunil Joshi, who was speaking to TechCentral in an interview in Midrand on Friday. “The outcome is weeks, not months, away,” says Joshi.
Once a final offer is on the table and has been accepted by Neotel shareholders — the company is controlled by India’s Tata Communications — then the proposed deal will be taken to the relevant regulatory authorities for approval.
Joshi says the due diligence has taken several months because it was interrupted by the year-end holidays and because Neotel’s business is “complex” and requires time to study. He says Vodacom is interested in Neotel for its fibre transmission infrastructure, its business focus and its access to radio frequency spectrum.
“Neotel has been growing reasonably well, but it needs scale,” he says of the rationale for the deal.
Although rumours surfaced in January that Vodacom parent Vodafone may be in talks with India’s Tata Group to buy Tata Communications, Joshi says the Neotel-Vodacom talks have been driven from South Africa and not by an international agenda.
“The broader news is more speculative. Tata Communications made a comment that they don’t speculate on rumours,” says Joshi. “From Neotel’s standpoint, this is a domestic South African engagement that says, ‘What is the right thing for Neotel and Vodacom to do.’”
If the two parties decide to pursue the deal — and that looks increasingly likely — then they’re almost certainly going to face tough opposition from rival operators, who will undoubtedly lodge objections at the Competition Commission.
Joshi says Vodacom will first conclude its due diligence before there is an engagement with regulators. “We have reviewed the pros and cons and benefits of such a transaction should it go through and we believe there is enough structure in place through [communications regulator] Icasa and the competition authorities that will lead to the right decision for South Africa and the right decision for Neotel and Vodacom. — (c) 2014 NewsCentral Media
