Liquid Telecom, a pan-African telecoms group, majority owned by Econet Wireless Global is all set to acquire South African communications network operator Neotel.
The shareholders of Neotel – Tata Communications of India and minority shareholders led by Nexus Connexion – have agreed for Liquid Telecom to acquire Neotel for ZAR6.55 billion. Liquid Telecom is partnering with Royal Bafokeng Holdings (RBH), a South African empowerment investment group, which has committed to take a 30% equity stake in Neotel.
The transaction, which is subject to obtaining all affirmative approvals and other corporate approvals that may be required by the shareholders of Neotel and other regulatory approvals, is transformative and will create the largest pan-African broadband network and B2B telecoms provider. Through a single access point, businesses across Africa will be able to access Liquid Africa’s 24,000km of cross-border, metro and access fibre networks. These currently span 12 countries from South Africa to Kenya, with further expansion planned.
Commenting on the transaction, Nic Rudnick, Liquid Telecom CEO, said, “We are excited about this transaction. Leveraging the strengths of RBH, Neotel and Liquid Telecom will offer an unprecedented fibre network with a unique set of services and international connectivity for telecom operators and enterprises across sub-Saharan Africa. For the first time, African companies will be able to connect with each other in a cost effective and reliable way, all on a single fibre network. We will also be increasing investments into Neotel to cater for rapidly accelerating mobile and enterprise traffic, enabling us to launch exciting new products and services.”
Albertinah Kekana, Royal Bafokeng Holdings CEO, said, “This transaction is part of our divestment strategy and in line with objectives to invest in high growth infrastructure sectors. As a long term investor, we are pleased to be partnering with Liquid Telecom who has a very credible track record in rolling out fibre in challenging and diverse markets. This deal represents our long-term investment approach and our commitment to the African growth story.”
Speaking on behalf of Tata Communications, Neotel’s majority shareholder, Vinod Kumar, Managing Director and CEO, said,“Liquid Telecom is the right partner for the next phase of Neotel’s evolution. Convergence of technologies and services will be the key driver of growth across the globe and this transaction will encourage inclusion and support the growth aspirations of the African continent. We believe that Liquid Telecom will deliver on the vision of a well-connected Africa, which will augur well for the South African telecom industry and Neotel’s customers.”
Nexus Connection, Neotel’s minority shareholder, also welcomed the transaction. Speaking on behalf of Nexus, Kennedy Memani, said, “We welcome this transaction with Liquid Telecom. It will see the sale of Neotel to new shareholders who have the vision, expertise and funding to continue to grow the company and to allow it to reach its full potential in South Africa and across the African Continent. We are confident that customers and employees will benefit from the transaction and from the resulting stability and business expansion.”
The transaction is subject to approval by South African regulatory authorities and is expected to be completed later this financial year.