Vodacom expects growth boost from Neotel deal

Johannesburg - Vodacom Group CEO Shameel Joosub said regulator approval of the South African wireless provider’s bid for broadband company Neotel will let it boost its forecast for sales growth.

The proposed R7bn acquisition will allow Johannesburg-based Vodacom, the country’s biggest mobile service provider, to add about one million high-speed fibre broadband lines in three years, Joosub said in an interview today.

The company, which is 65% owned by Vodafone Group, has forecast “low, single-digit” service-revenue growth in the “medium term”.

“If the transaction is approved, we will then give renewed guidance with Neotel included, which will obviously be improved,” Joosub said by phone.

Joosub, who is working to overcome competitors’ opposition to the deal, made a presentation to the Independent Communications Authority of South Africa (Icasa) today seeking approval for the acquisition.

Vodacom is buying Neotel from India’s Tata Communications to expand its fibre-optic network.

MTN Group, Africa’s largest wireless operator, and fixed-line operator Telkom have said the transaction would make Vodacom too dominant.

MTN and Telkom have been in talks to share their mobile networks for the last 10 months to reduce the cost of Telkom’s mobile business and give MTN access to spectrum.

“If the Telkom deal happens and you take into account that both Telkom and MTN have more spectrum than us, then that would put us at competitive disadvantage,” should Vodacom fail to win approval to buy Neotel, Joosub said.

Vodacom’s share price rose 1.2% to R129.37 rand at 2:45 p.m. in Johannesburg.