Acquisition of Transtel by Neotel
March 19, 2008

Neotel is pleased to announce that the Competition Tribunal of South Africa has approved its acquisition of Transtel, the telecommunications division of Transnet without any conditions. The approval fulfils the final condition precedent to the conclusion of the transaction following the sale agreement reached between Neotel and Transnet in December 2007.

A phased integration process aimed at maximising the assets, infrastructure and competencies of the two organisations will begin with immediate effect.

Neotel views the acquisition of Transtel as a strategic move to address a broader enterprise market. Transtel, with over 100 locations nationwide, will enable Neotel to deliver and support telecommunications services to address this market sooner than otherwise possible. Ajay Pandey, the MD and CEO of Neotel says; "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 is also amongst the few employers of voice and data telecommunication skills in South Africa, and hence Neotel will gain from the pool of more than 500 staff, most with very scarce competencies in these fields. On the revenue front, Transtel would bring to Neotel a revenue base of around R600 million from large enterprise customers, including Transnet.

For Transnet, the sale marks another milestone as it completes its transformation. Over the last couple of years, Transnet, the state-owned enterprise, has transformed into a focused freight transport and logistics services provider with assets in ports, rail and pipelines to service its customers in the bulk and manufacturing sectors. Commenting on the transaction, Transnet Group Executive Karl Socikwa says: "This asset fell outside our core focus of rail freight, ports and pipelines and having bedded down the turnaround, our focus now shifts on gearing up the Company for volume-led growth through investment into capacity expansion. This sale will enable specialists in this highly specialized area to unlock value in this valuable asset"

Ajay Pandey adds "Over the next month, we will be communicating directly with our customers, suppliers and other associates regarding the roadmap of the integration process and how it will affect them specifically".