Tata Communications begins to renegotiate 7-bn rand Neotel deal
23 Nov 2015
Tata Communications has entered into an agreement with Vodacom South Africa, a subsidiary of British telecom major Vodafone Group, to renegotiate an earlier 7 billion rand deal (nearly $500 million).
The company had signed a deal in May this year to sell its entire stake in its subsidiary Neotel, South Africa's second-biggest fixed-line services provider to Vodacom SA (See: Tata Communications to sell SA arm Neotel to Vodacom for $676 mn).
''Neotel's shareholders are now in discussions with Vodacom South Africa regarding a revised transaction structure. The outcome of these discussions will directly impact the extent of the approval being sought from the Competition Tribunal and the scope of the hearing,'' Tata Communications said in a BSE filing.
The Tata group company, however, did not divulge the reason for the renegotiation of the deal.
The deal, which was expected to close by the end of this fiscal year, had earlier received the south African Competition Commission's (which looks into anti-trust issues) provisional approval. The tribunal was scheduled to commence hearings for the final approval from today.
Neotel and Vodacom South Africa have sought postponement of the hearings, Tata Communications informed BSE.
Tata Communications had initially acquired a stake in 2006, after South African government's initiatives to deregulate the telecom market, by paying $250 million. The Indian company later raised its holdings to about 68 per cent.
Nexus Connection and Communitel are the other investors in Neotel.
The Neotel acquisition will give Vodacom access to the latter's fibre optic network, while it would enable Tata Communications to pare its debt, which stood at nearly Rs10,000 crore as of 30 September 2015.
According to media reports, the acquisition was opposed by competitors MTN Group, Cell C and Telkom SA, who argued the tie-up would give Johannesburg-based Vodacom dominance over South Africa's high-speed Internet market.
