Vodacom relinquishes Neotel’s licences as part of new takeover terms

South African operator Vodacom has agreed not to acquire Neotel’s spectrum under the revised terms of its proposal to acquire the company.

The market leader has offered ZAR7 billion ($500 million) to take over Neotel, which is currently owned by Indian firm Tata Communications. The proposal has met with strong enough opposition from rival operators - who have complained that Vodacom should not be able to obtain more spectrum – that South Africa’s Competition Tribunal is conducting a hearing into it.

Vodacom previously asked the tribunal to delay this hearing while it negotiates new terms for the acquisition with Neotel, and the operator has now announced that it will not buy Neotel’s licences and instead provide a roaming agreement to all mobile operators.

The statement read: “Shareholders are advised that agreement has been reached on a modified transaction in terms of which Vodacom South Africa will acquire inter alia the majority of Neotel’s assets related to its fixed line business as a going concern, excluding, inter alia, Neotel’s licences.” The licences in question cover spectrum along with networks and services.

“Contemporaneously, Neotel will offer a roaming agreement to all the mobile network operators, including Vodacom South Africa”, continues the statement, which also noted that the firms have provided the renegotiated terms to the Competition Tribunal for regulatory consideration at a pre-hearing. Vodacom did not confirm whether the new terms have affected the proposed price of the deal.

Approval from South African regulator ICASA has required Vodacom to pledge not to cut any jobs, and to invest $821 million across the next 5 years.

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