Liquid Telecom acquires SA’s Neotel
Business Reporter
Liquid Telecom, a subsidiary of Econet Wireless Global has acquired South African communications network operator Neotel for R6,55 billion (around $430 million) creating the largest independent fibre network operator across the continent. In the transaction, Liquid Telecom will partner with Royal Bafokeng Holdings, a South African empowerment investment group which has committed to take a 30 percent equity stake in Neotel.Liquid Telecom is acquiring the company from its shareholders, Tata Communications of India and minority shareholders leb by Nexus Connection.
The transaction is, however, subject to affirmative approvals by Neotel shareholders and regulatory approval from South Africa’s ICASA and the Competition Commissions.
The deal provides Liquid Telecom with an opportunity to combine Neotel’s extensive network across South Africa with Liquid’s 24 000km cross border fibre network that spans 12 countries, from South Africa all the way up to Kenya. Of the network, Liquid Telecom Zimbabwe has fibre on 10 500km.
The deal will also create a scalable platform for Liquid to continue its rapid expansion into new African markets and provides an opportunity to enter the South African market, the largest in Africa, with scale.
“This deal is about creating an unparalleled pan-African fibre network. Together Neotel and Liquid Telecom will offer an unprecedented fibre network footprint in Africa, with innovative services and international connectivity for telecoms operators and enterprises across sub-Saharan Africa,” said Wellington Makamure group executive, Southern Africa.
“Using the combined operations, African companies will be able to connect with each other in a cost effective and reliable way, all on a single fibre network.
“We believe in the potential acceleration of both mobile and enterprise traffic and intend to expand and upgrade the Neotel network through increased investment,” said Mr Makamure.
He said Liquid Telecom has a unique network and has experience in the enterprise market in Africa and also already operates in other very competitive markets in Africa.
“Liquid Telecom will invest in Neotel to make it even more relevant to its customers and will add value in the telecommunications market.
“Liquid plans to rehabilitate the business which will improve network access/performance for both current and prospective customers and to considerably expand the network,” he said.
The parties to the deal believe that Neotel will be able to offer its customers seamless connectivity to key strategic locations across the continent, offering compelling value proposition for blue chip customers.
Through Liquid Telecom’s partnership with RBH, Neotel will benefit from RBH’s robust governance structures as well as a re-balanced and de-risked financial profile.
The deal will also significantly strengthen Liquid Telecom’s service offering to both wholesale and enterprise customers, providing additional scale and reach into profitable market segments.
Liquid Telecom chief executive officer Nic Rudnick said leveraging the strengths of RBH, Neotel and Liquid Telecom will offer an unprecedented fibre network with a unique set of services and international connectivity for telecom operators and enterprises across sub-Saharan Africa.
“For the first time, African companies will be able to connect with each other in a cost effective and reliable way, all on a single fibre network. We will also be increasing investments into Neotel to cater for rapidly accelerating mobile and enterprise traffic, enabling us to launch exciting new products and services,” said Mr Rudnick.
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