Drag on Vodacom deal ‘frustrating’, says Neotel acting CEO

Converged network operator Neotel acting CEO Kennedy Memani on Wednesday expressed his frustration at the protracted process in having a R7-billion tie-up between the nine-year-old operator and JSE-listed telecommunications giant Vodacom concluded.

Speaking at the yearly My Broadband Conference, in Midrand, he said the deal, filed in 2014, had taken more than a year to be finalised, leaving Neotel employees and management uncertain over the company’s future, as India-based parent Tata Communication sought to offload the capital intensive business.

“It is very frustrating,” he told delegates at the conference, noting that the average merger deal in South Africa was finalised within 135 days.

However, he assured shareholders that the much-anticipated deal, which had generated much objection, was still on track, with both parties ready to conclude the process immediately upon receiving the Competition Tribunal’s decision in two months’ time.

The parties applied for the regulatory approval for the transfer of control of spectrum licences after JSE-listed Vodacom concluded an agreement in May 2014 with Tata for the full buy-out of Neotel, whose employees would be absorbed into Vodacom’s fixed enterprise business.

The Independent Communications Authority of South Africa gave its approval for the buyout in June this year, followed shortly thereafter by the Competition Commission’s conditional approval.

The tribunal would now convene hearings into the matter from November 23 to December 11.

The transaction was expected to accelerate Vodacom’s unified communications strategy as the group integrated its extensive distribution and marketing capabilities with Neotel’s fixed network and product capabilities.

Neotel currently had access to over 15 000 km of fibre-optic cable nationwide, including 8 000 km of metropolitan fibre in Johannesburg, Cape Town and Durban.

Further, the combined entity would be able to leverage Neotel’s assigned spectrum of 2 x 12 MHz of 1 800 MHz, 2 x 5 MHz of 800 MHz and 2 x 28 MHz of 3.5 GHz spectrum.