Liquid Telecoms’ buyout of Neotel nears final hurdle

15th November 2016

By: Natasha Odendaal

Creamer Media Senior Deputy Editor

  

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The R6.5-billion buyout of converged communications network operator Neotel by privately owned Pan-African telecoms group Liquid Telecom is reaching its final hurdle – approval by the Independent Communications Authority of South Africa (Icasa).

The acquisition was progressing “very well” and the transaction was expected to draw to a close in due course, Liquid CEO Nic Rudnick told media on the sidelines of the AfricaCom conference, held in Cape Town from November 15 to 17.

With the Competition Commission’s approval under its belt, the deal is not expected to experience any difficulties with the final regulatory approvals from Icasa.

In June, Liquid, along with South African empowerment investment group Royal Bafokeng Holdings, made the R6.55-billion offer to acquire Neotel from parent company Tata Communications and other minority shareholders.

Neotel head of data centres and managed services Angus Hay previously said the transaction was expected to be concluded in the first quarter of next year, following the resolution of certain regulatory processes.

In October, the Competition Commission approved the transaction without conditions, finding that the proposed merger was unlikely to substantially prevent or lessen competition or raise public interest concerns.

This had followed telecommunications giant Vodacom’s abandonment in March of its years-long, R7-billion bid for the converged operator, after regulatory complexities and the failure to fulfill certain conditions led to the restructured proposal’s lapse.

Rudnick on Tuesday said the absorption of Neotel would enable seamless online connectivity from South Africa into the rest of Africa and connectivity access from Africa to its most southern counterpart, while further expanding Liquid’s presence across the country.

Neotel boasts an extensive metro and national long-distance next-generation network, powered by a high-performance fibre-optic core with availability exceeding 99.99% and access to five submarine cables, while Liquid housed over 24 000 km of cross-border, metro and access fibre networks spanning more than 12 countries from South Africa to Kenya.

“The Neotel transaction is significant for us,” he added.

The deal adds to Liquid’s other transactional activities across the continent as it transitions into its targeted Pan-African service provider status.

The group recently entered a joint venture deal with the Botswana Power Corporation (BPC) to commercialise the fibre infrastructure spanning the utility’s power lines and launching a cost-effective fibre network.

Liquid will fund the expansion of BPC’s existing fibre network, which is used for signaling communications, to establish end-to-end services and roll out a fibre network more cost effectively.

“We have been forming alliances with power companies which have good infrastructure . . . to deliver fibre,” Rudnick pointed out.

Liquid had similar deals with utilities in Zambia and Zimbabwe.

These types of deals with power companies unlock critical mass for Liquid and open opportunities in markets that would otherwise be deemed unviable, considering expansive land mass and smaller populations.

Further, Liquid plans to continue its build-out of fibre networks into new countries across Africa, adding to its portfolio across South Africa, Botswana, Zimbabwe, the Democratic Republic of Congo, Burundi, Kenya, Uganda and Tanzania, besides others.

Edited by Creamer Media Reporter

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