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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.
Vodacom, a subsidiary of British telecom major Vodafone Plc, will acquire a majority of Neotel’s fixed-line business, but excludes spectrum and licences. As part of this agreement, Neotel will offer a roaming arrangement to all the mobile network operators, including Vodacom, Tata Communications said in a regulatory filing.
Tata Communications and Vodacom have been in negotiations since September 2013, after the Tata group company decided to exit Neotel, South Africa’s second-biggest fixed-line phone operator.
In May this year, the Indian company had agreed to sell its entire 68 per cent stake in Neotel to Vodacom SA, under a 7-billion-rand agreement.
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.
The Competition Tribunal in South Africa, which looks into anti-trust issues, had earlier granted provisional approval for the deal. However, with the two companies going back to the discussion table, Neotel and Vodacom have sought the hearing to be postponed.
With the companies inking a deal now, the Tribunal will now look into the anti-trust issues on December 10, 2015.
The deal will also require Indian government’s approval as the Centre holds a 26 per cent stake in Tata Communications, formerly Videsh Sanchar Nigam Ltd (VSNL). Tata Communications had acquired the Neotel stake in 2006, following the South African government’s initiatives to deregulate the telecom market, by paying $250 million.
The company later raised it to about 68 per cent. Nexus Connection and Communitel are the other investors in Neotel.
Tata Communications shares closed up 0.66 per cent at Rs. 414.25 on the BSE, while the benchmark Sensex ended down 0.86 per cent.
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