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TataCom to sell S Africa arm Neotel to British Vodafone’s subsidiary

British telecom major Vodafone's South African subsidiary Vodacom has reached an agreement to buy Neotel, controlled by Tata Communications, for 7 billion rand (around $676 million).

‘The shareholders of Neotel and Vodacom SA announced on Mondya that they have favourably concluded an agreement on the commercial structure and terms to proceed for Vodacom to acquire 100 per cent of the shares of Neotel, valued at an enterprise value of ZAR 7.0 billion (about Rs 3,950 crore),’ Tata Communications said in a statement.

Neotel, South Africa's second-biggest fixed-line phone operator, is 68.5 per cent owned by Tata Comm. It competes with former state-owned service provider Telkom.

‘Tata Communications is pleased with the outcome of this deal. It is in line with our financial objectives while paving the way for Neotel to improve its value proposition in the South African market,’ the firm's MD and CEO Vinod Kumar said.The structure of the deal and its commercial terms remain subject to regulatory and competition authority approvals and the parties will be immediately commencing the necessary processes in that regard, the statement said.‘We are encouraged at the progress made to date and will focus now on ensuring compliance with the regulatory approvals processes and the engagement with the competition authorities,’ Neotel MD & CEO Sunil Joshi said.

Meanwhile in another international deal, Internet giant Yahoo Japan on Monday said it has cancelled plans to buy domestic telecom company eAccess from its parent SoftBank Corp in a deal valued at about $3.2 billion.In March, Yahoo’s Japanese unit — whose top shareholder is SoftBank —announced the deal which it said was aimed at growing the firm’s Internet services business through smartphones and tablets.

But on Monday, Yahoo Japan said it has called off the merger after concluding it was more effective to operate the two firms independently.
The deal had been scheduled to be completed in early June, when eAccess is set to merge with telecom company Willcom Inc, also a member of the SoftBank group. That deal is still slated to go ahead.
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