Tata Communications to sell its South African unit Neotel

Tata Communications has said that it has agreed to sell its South African unit Neotel to Vodacom for $676 million, or Rs 3,959 crore.

The Neotel sale will help the Tata Communications to cut down its over Rs 11,000-crore debt to some extent, according to a report.

"Tata Communications is pleased with the outcome of this deal. It is in line with our financial objectives while paving the way for Neotel to improve its value proposition in the South African market, said Vinod Kumar, MD and CEO, Tata Communications.

"We are encouraged at the progress made to date and will focus now on ensuring compliance with the regulatory approvals processes and the engagement with the competition authorities. Neotel continues to grow in the South African market and with this, when approved, will enable a greater choice of products and services for our customers and increased competition, while Neotel continues to deliver improved services and grows its customer base," said Sunil Joshi, MD & CEO of Neotel.

"This transaction will impact the landscape of the Telecommunications industry in South Africa. We believe it will enhance the customer experience and benefit the South African public, said Kennedy Memani, Nexus Connexion.

Eight month ago, South African mobile operator Vodacom Group and Neotel have announced that they have entered into exclusive discussions regarding a potential acquisition of 100 percent of the shares of Neotel.

Neotel is the South Africa's second-biggest fixed-line phone operator, is 68.5 per cent owned by Tata Group of India - through VSNL and Tata Africa Holdings Pty (Ltd).