Vodacom’s proposed acquisition of Neotel would give South Africa’s largest mobile operator the fibre infrastructure scale required to meet government’s ambitions of delivering "broadband for all" by 2020.

JSE-listed Vodacom last month confirmed that talks were under way regarding the mobile operator’s possible acquisition of the India-based Tata Communications subsidiary, putting to bed ongoing merger speculation.

Speaking at the My Broadband Conference, in Midrand, on Wednesday, Vodacom Group CEO Shameel Joosub said the company had the capacity to inject significant capital into Neotel, in part, to leverage the converged operators’ expansive fibre network.

Neotel has access to over 15 000 km of fibre-optic cable, including 8 000 km of fibre in Johannesburg, Cape Town and Durban.

Neotel had “done well” up until now, but it was underfunded and Vodacom would inject the required funds to grow the business further, Joosub added.

Vodacom saw a key opportunity in fixed-line networks and building fibre infrastructure to its base stations, as well as to homes and businesses, thereby providing high-speed fixed connectivity to many more businesses and consumers.

The deal could enable Vodacom and Neotel to assist government with its broadband ambitions.

“We can deliver broadband access to every home before 2020,” Joosub stated, referring to government’s aim of having every home connected within the next seven years.

The Department of Communications (DoC) planned to roll out broadband to all by 2020, but these plans had been much delayed by, besides other factors, the finalisation of regulations.

The DoC last year initiated the development of the National Broadband Policy as part of its move to transform the country’s information and communication technology sector’s inadequate policies in an effort to fast-track South Africa’s broadband backbone and access infrastructure, particularly in rural and underserved areas.

The much-awaited National Broadband Policy was under review by the relevant government departments and the committee responsible for overseeing the implementation of Strategic Infrastructure Project 15 of the National Infrastructure Plan.

Communications Minister Yunus Carrim previously said that, by November, the finalised document would be delivered.

The DoC’s earlier draft broadband policy, which was intended to facilitate growth, did not adequately deal with a number of challenges, including market structure and the regulatory environment.

Meanwhile, Vodacom’s acquisition of Neotel would also provide the mobile operator access to Neotel’s spectrum, which the JSE-listed group believed would stimulate greater competition in the fixed telecommunications sector and accelerate the provision of high-speed data links.

Joosub pointed out that Vodacom, the first operator in South Africa to launch long-term evolution (LTE), had enabled 69% of its base stations to cater for the latest-generation technology, with 735 currently live LTE-enabled sites.

By financial year-end, this transition would be completed, in an effort to keep pace with rapidly growing demand for data, which had increased 60% year-on-year. But access to spectrum remained the main inhibitor.

The acquisition was subject to the successful conclusion of commercial negotiations and receiving the requisite regulatory and corporate approvals.