African telecom company Vodacom has reached an agreement to acquire 100 per cent share capital in South African telecoms company Neotel for US$668mn
According to the agreement, Neotel will become a subsidiary of Vodacom South Africa, and the resulting combination is expected to bring in revenues worth US$477bn, stated Vodacom.
Shameel Josub, CEO of Vodacom Group, said, "Through the combination of these two businesses, the provision of a wider range of business services and much needed consumer services like fibre-to-the-business and fibre-to-the-home becomes a concrete reality – it will be good for the consumer, good for business and good for the country. And for our investors, the transaction fits perfectly within the priorities of Vodacom’s growth strategy focused on continuing our investment in data and our enterprise business.”
The combined networks are expected to improve overall network availability and reduce consumer serving costs, said Vodacom officials. The new business is also supposed to boost broadband connectivity in line with the South African government's targets. Vodacom hopes to roll out high speed 4G services as well.
Neotel currently has access to 15,000 km of fibre-optic cable, including 8,000 km of metro fibre in Johannesburg, Durban and Cape Town. With the new enterprise, Vodacom has claimed that it seeks to accelerate growth in unified communication products and services by integrating extensive distribution and marketing capabilities with Neotel's fixed network and product capability.
Vodacom plans to fund the acquisition through available cash resources and existing credit facilities. However, the transaction has to satisfy several applicable regulatory approvals, and is expected to close before the end of the financial year.
