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Tata Communications to sell Neotel fixed line to Vodacom SA

On November 23, Tata Communications said it was renegotiating the deal, which was expected to close by the end of this fiscal year, which was one of the major divestments planned as part of Tata group Chairman Cyrus Mistry’s strategy to exit non-core business.

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The two companies had entered into exclusive talks for due diligence pertaining to the deal in 2013.

However, on Tuesday morning, Vodacom announced that it was only going to acquire the “majority of Neotel’s assets related to its fixed line business as a going concern, excluding, inter alia, Neotel’s licences”. The structure of the deal, worth $675 million when originally announced, and its commercial terms were subject to regulatory and competition authority approvals.

Under a new agreement, Tata Communications has agreed to sell its entire stake in South African subsidiary Neotel to Vodacom SA for an undisclosed amount.

These licences pertain to Neotel’s spectrum, electronic communications network (ECN), and its electronic communications network services (ECNS), Vodacom said.

“…our subsidiary in South Africa, Neotel, together with Vodacom South Africa, have today submitted to the Competition Tribunal the signed transaction documentation in respect of the modified transaction”, the statement said.

Neotel, which started operations in 2007, is the second-largest provider of fixed telecommunications services for both businesses (commonly referred to as enterprise services) and consumers in South Africa.

South Africa’s biggest mobile network, Vodacom, has given up on its bid to acquire Neotel’s spectrum amid opposition from rival companies.

The Competition Tribunal will consider this at a pre- hearing scheduled for December 10, 2015, it added.

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Vodacom’s decision to make the spectrum available to rivals, will help them accelerate deployment of the super-fast 4G network infrastructure, which requires the type of spectrum that Neotel already has.

Tata Communications to sell majority of Neotel assets to Vodacom