After months of wrangling and negotiations, Vodacom has officially come to an agreement with Neotel’s shareholders to buy 100% of the company as well as all shareholder loans for R7 billion. The deal is still subject to regulatory approval from the likes of the Competition Commission who will definitely have something to say about the consolidation of the telecoms market when there are already so few players in the space.
The deal will see Vodacom expand its physical infrastructure by adding Neotel’s extensive 15 000km long fibre optic cable network to its own fibre network which the company says will be used to further its fibre-to-the-business and fibre-to-the-home aspirations.
“Through the combination of these two businesses, the provision of a wider range of business services and much-needed consumer services like fibre-to-the-business and fibre-to-the-home becomes a concrete reality,” said Vodacom’s group CEO Shameel Joosub “it will be good for the consumer, good for business and good for the country. And for our investors, the transaction fits perfectly within the priorities of Vodacom’s growth strategy focused on continuing our investment in data and our Enterprise business.”
The elephant in the corner is of course Neotel’s allocation of highly sought after radio spectrum which would allow Vodacom to leap-frog its competitors in not only expanding and improving its LTE services but also in rolling out next generation LTE-advanced networks. Neotel’s spectrum is divided up between three different spectrum ranges with 2×12 MHz of 1800 MHz, 2×5 MHz of 800 MHz and 2×28 MHz of 3.5 GHz spectrum.
It will be the intended direct transfer of the spectrum from Neotel to its new parent that will be under heavy scrutiny when the deal comes before ICASA to give its stamp of approval before it can go ahead. Vodacom does expect the deal to go through before the end of its next financial year in March 2015.