British telecom firm Vodafone's South African subsidiary Vodacom has reached an agreement to buy Neotel, controlled by Tata Communications, for 7 billion rand (around $676 million).
"The shareholders of Neotel and Vodacom SA 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 (about Rs 3,950 crore)," Tata Communications said in a statement.
Neotel, South Africa's second-biggest fixed-line phone operator, is 68.5 per cent owned by Tata Comm. It competes with former state-owned service provider Telkom.
"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," the firm's MD and CEO Vinod Kumar said.
The structure of the deal and its commercial terms remain subject to regulatory and competition authority approvals and the parties will be immediately commencing the necessary processes in that regard, the statement said.
"We are encouraged at the progress made to date and will focus now on ensuring compliance with the regulatory approvals processes and the engagement with the competition authorities," Neotel MD & CEO Sunil Joshi said.