May 19: Tata Communications Ltd will sell its 67 per cent stake in South African company Neotel to Vodacom, a subsidiary of Vodafone.
The Tata group company today announced that the shareholders of Neotel and Vodacom SA have reached an agreement, paving the way for Vodacom to acquire 100 per cent of Neotel at an enterprise value of $626 million.
The announcement comes almost eight months after the two companies agreed to explore a potential deal.
The transaction, which will give Vodacom the largest fibre optic network for high-speed Internet, is expected to close by the end of this fiscal.
Tata Communications holds around 67.32 per cent in Neotel. The rest is owned by Communitel, a private consortium, and Nexus Connection, a black empowerment group.
Neotel is South Africa’s second biggest fixed-line telephone operator with 1.52 lakh customers and around 1,000 employees. It also provides a range of value-added voice, Internet and data services.
Tata Communications had initially acquired a 26 per cent in the company in 2006 for $250 million. The investment was one of the first overseas greenfield projects for the Tata company, which subsequently raised its stake in phases.
It is understood that the transaction, which excludes Neotel’s debt, will help Tata Communications to ease the burden on its balance sheet. However, this could not be confirmed.
Vodacom said it would fund the deal through cash and loans. The deal, which is subject to regulatory approvals, will give the Vodafone subsidiary the much needed airwaves to roll out third-generation telecom services.
Vodacom group chief executive officer Shameel Joob said the buyout fitted the company’s aim to grow its data business.
The Johannesburg-listed company reported a 40 per cent jump in revenue from data on the back of an increase in smartphone Internet access.
“Tata Communications is pleased with the outcome of this deal. It is in line with our financial objectives while paving the way for Neotel to improve its value proposition in the South African market,” Vinod Kumar, managing director and CEO of Tata Communications, said.
Following the announcement, the shares of Tata Communications rose nearly 4 per cent, or Rs 11, to end at Rs 340.80 on the Bombay Stock Exchange today.
Tata Global Beverages today said its UK subsidiary had acquired a 100 per cent stake in the equity capital of Australia-based Bronski Eleven Pty Ltd for an undisclosed sum.
Bronski Eleven is engaged in the coffee business under the MAP brand, Tata Global Beverages said in a statement.
The company said this investment was in line with Tata Global’s vision to become a leader in natural beverages —tea, coffee and water.