Neotel acquires Transnet
Economic Times — April 12, 2007

South African operator Neotel, in which the Tatas have 51 per cent stake, has acquired Transtel Telecoms (TT) for around $33m. TT is the commercial telecommunications arm of Transnet, South Africa's largest transport and logistics company.

The acquisition has been accepted in principle accepted by Transnet. The proposed transaction will yield annual revenues in excess of R400m (approx $56m) for Neotel, the company said in a release on its website.

Transtel also has a value added network services (VANS) licence, which allows the company to leverage its telecoms network to compete for the business of non-group companies as well.

Neotel, South Africa's second fixed line operator, will gain as it will be able to speed up the roll out next generation services for businesses.

Neotel MD Ajay Pandey said, "We are committed to exploring various options to ensure a faster entry into the market.

This acquisition provides us a platform for introducing our next-generation services for businesses, providing us a nation-wide presence instantaneously, and therefore the ability to serve the diverse and geographically dispersed needs of our customers."

Transtel has good annual revenues from its various enterprise customers and a substantial telecoms infrastructure. With an employee strength of 500, it is among the few employers of voice and data carrier telecom skills in South Africa. Neotel is expected to gain from the pool of scarce skills in these fields.

The deal is subject to signing of a sale and purchase agreement and mandatory approvals, which the parties expect to conclude within the next 12-16 weeks.

Neotel is VSNL's maiden South Africa venture in which it has invested $350m. The company launched services on August 31, 2006 and the Tatas propose to invest an additional $850m in Neotel.