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Tata Comm sells majority stake in its Africa ISP Neotel for $428M

Tata Communications has signed an agreement with Liquid Telecom to sell its majority stake in South Africa based telecom provider Neotel for ZAR 6.55 billion.(~$428 million). The deal will allow Liquid Telecom to expand its telecom operations in South Africa, making it the largest pan-African broadband provider once it receives all regulatory and shareholders’ approval. In addition, South Africa based Royal Bafokeng Holdings has agreed to acquire a 30% stake in Neotel once Liquid Telecom fully acquires the company from Tata. In 2014, Vodafone-owned Vodacom agreed to buy Neotel from Tata for ZAR 7.0 billion ($676.45 million). The companies had entered into exclusive discussions in October 2013. However, the deal was called off because of regulatory troubles that Tata faced in South Africa. Note that Tata acquired a controlling stake of 61.5% in Neotel in 2011, with other shareholders like Nexus Connexion and CommuniTel owning smaller shares in Neotel at the same time. Write-offs: While announcing its Q1FY16 results Tata said that it had write off Rs 190 crore of Neotel during the quarter in impairment charges, without disclosing Neotel’s consolidated results. The company added that during the financial year 2015-16 Neotel chose to discontinue operation in 2015, but later decided to continue running operations. Neotel currently provides value-added voice, internet and data services for businesses, wholesale network operators and providers and retail customers, and connects the major centres in South Africa to each other and to the world, directly linking its infrastructure into Tata Communications’ network. Its fibre network…

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