Vodacom ends $446 million plan to buy Neotel

01 March 2016 | Alan Burkitt-Gray


South Africa’s Vodacom has called off its planned $446 million takeover of fixed-line operator Neotel due to what it called “regulatory complexities”.

Tata Communications, which was hoping to sell the stake in Neotel to Vodacom, said in a letter to shareholders that it “remains committed to its investment in Neotel”.

Vodacom, part-owned by UK-based Vodafone, has been talking to Neotel about an acquisition since May 2014 and the deal was restructured in December 2015. The deal would have combined Vodacom’s South African mobile network with Neotel’s fibre network. Rival operators Cell C, MTN and Telkom all opposed the deal.

Shameel Joosub, group CEO of Vodacom, commented: “It is disappointing that we have reached this conclusion despite all our efforts to find a way to deal with the complexities of the restructured transaction. Our ambition to increase the rollout of fibre-based broadband services to customers remains.”

Vodacom would originally have acquired Neotel’s licences and spectrum as part of the deal, but these were excluded when the deal was restructured in December – under which Vodacom would have bought the assets, customer base and staff of the company. The spectrum was to be offered by Neotel to all network operators through roaming arrangements.

“We will continue to look for spectrum opportunities, as well as opportunities to accelerate our fixed line business,” said Joosub.