Neotel keeps mum on fresh merger reports

2016-05-10 13:41 - Gareth van Zyl, Fin24
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Neotel. (Duncan Alfreds, Fin24)


Johannesburg - Local fixed-line telecommunications company Neotel is keeping tight-lipped amid reports that it could be up for sale again.

Undersea cable provider Seacom and African telecoms group Econet Wireless are exploring buying Neotel, technology website MyBroadband reported on Tuesday.

The report, which references unnamed “industry sources”, comes after South Africa’s biggest mobile network Vodacom in March this year walked away from acquiring Neotel for R7bn.

READ: Vodacom abandons bid to buy Neotel

Vodacom blamed “regulatory complexities and certain conditions not being fulfilled” as key reasons for it abandoning the Neotel deal.

Vodacom also walked away from the deal after it decided to drop its bid to acquire Neotel’s spectrum amid concerns raised by Cell C and MTN.

But following fresh reports of a new possible sale, Neotel is keeping quiet.

"Neotel prefers not to comment on market speculation so has no comment at this time," the company’s spokespeople said in a statement to Fin24.

Seacom and Econet Wireless officials could not be reached for comment at the time of writing.

Last mile ambitions

Both Seacom and Econet Wireless play in the African broadband network space.

Seacom built the first submarine 17 000km broadband cable system along Africa’s East coast in 2009.

But the company last year also formally launched Seacom Business which taps its undersea network and supplies high-speed connectivity and cloud services to corporates in South Africa and other parts of Africa.

Seacom Business’ connectivity is supplied over the ‘last-mile’ or terrestrial fibre networks that ultimately connect to the company’s undersea network.

READ: Seacom targets enterprises with fibre connectivity

Meanwhile, Econet is a telecommunications group with operations and investments in Africa, Europe, South America, North America and the East Asia Pacific Rim.

Econet operates Zimbabwe’s biggest mobile network, Econet Wireless, while it further owns Liquid Telecom which supplies supplies fibre optic, satellite and international carrier services to African mobile network operators, internet service providers and businesses.

Neotel, which was launched in 2006 as a competitor to South Africa's Telkom, has experienced turbulent times in the last 18 months.

Apart from the Vodacom deal falling through, Neotel's CEO Sunil Joshi resigned after an investigation by the board of the company cleared him of bribery.

Joshi and the company’s former chief financial officer Steven Whiley were placed on special leave last year amid allegations that Neotel made illicit payments of R91m in fees to a ‘letterbox company’ to win a R1.8bn Transnet deal.

READ: Neotel CEO Sunil Joshi quits

Read more about: seacom  |  neotel