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Vodacom to buy Neotel for R7.0 bn

Vodacom clearly isn’t taking their own recent acquisition efforts light-heartedly; it just announced plans to buy Neotel in a deal worth about R7.0 billion. The communications giant sees a takeover as an opportunity to expand how it delivers fixed telecoms beyond just the bundles it has today. Once officials approve the merger, this would see Neotel become a subsidiary of Vodacom South Africa and the combination with Vodacom’s South African fixed enterprise business will create a national service provider with annual revenues of more than R5bn.

The telecom is making a lot of promises to assuage regulators that will no doubt look at the proposed mega-buyout very closely — Vodacom clearly wants to avoid this resulting in a failed attempt. It hopes to bring high-speed internet access to somehwat 1,5 million additional customers, primarily in rural areas where a mix of fixed wireless and fiber-to-the-home could get people online.

Vodacom estimates that the purchase will start adding value within five years of closing. Whether or not it closes is another matter. Service priver, Cell C already has concerns about the possible anti-competitive effects of Vodacom’s proposed buyout of Neotel; it’s likely that the Competition Comission will see this merger  similar approach to. If Comcast runs into regulatory trouble, it won’t be surprising if AT&T ends up in the same boat.

Papi Mabele
Tech enthusiast at heart. Lover of all things digital. Papi is the founder of SA Vibe and has been sharing his love for gadgetry since 2010. Papi sees no need for wearable tech in his busy schedule and considers the Xbox One as non existant. He may come across as bias at times, and still holds a grudge at BlackBerry for creating the 8520.