Tata Communications has sealed an all cash deal to sell a 67.32 per cent stake in its South African telecom subsidiary Neotel for an enterprise value of $ 680 million (Rs 3,957) to Vodacom SA, the South African telecom arm of the Vodafone Group.
Tata Communications confirmed the broad agreement, saying that Vodacom SA has agreed to buy the stake in Neotel, which has close to 1,000 employees and over 1,15,000 customers.
Neotel offers voice and internet services in Africa.
Tata Communications shares rose 2.6 per cent to Rs 301.55 on the Bombay Stock Exchange.
"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 chief executive officer Tata Communications, said in a statement on Monday.
"The shareholders of Neotel and Vodacom SA have announced today that they have favourably concluded an agreement on the commercial structure and terms to proceed for Vodacom to acquire 100 per cent of the shares of Neotel valued at an enterprise value of ZAR 7.0 billion," Tata Communications further stated.
The deal will help Tata Group's undersea cable company trim its consolidated net debt of Rs 10,307 crore at end of March 2014.
Tata Communications first invested in Neotel in 2006, when it paid around $ 250 million for a 26 per cent stake.
With that, it owned the highest share of the second fixed- line telecom operator in South Africa. Subsequently, the company raised the stake to 67 per cent in Neotel.
Following the deal, Vodacom Group will also get access to 15,000 kilometres of Neotel's fibre optic cable, including 8,000 kms in Johannesburg and Cape Town. In addition, Vodacom will also get airwaves in the 1.8 Ghz, 800 Mhz and 3.5 Ghz bands.
Tata Communications and Vodacom entered into exclusive discussions for the Neotel acquisition last September.
Courtesy: Mail Today