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 of over 15,000 km spans Johannesburg, Pretoria, Durban, Cape Town, Pietermaritzburg, Port Elizabeth and traverses approximately 30 other cities, towns and villages in South Africa.
STT buys major stake in Tata subsidiary: Last month, Singapore Technologies Telemedia (STT) through its global data centre subsidiary ST Telemedia Global Data Centres (STT GDC) acquired 74% stake in Tata’s data centre business in India and Singapore. Tata will remain as a significant shareholder in its data center business by holding the remaining 26% stake. A Mint report pegged the size of deal at $634 million.
IoT network in India: In November, Tata Communications had successfully completed trials of its new Low Power Wide Area Network (LPWAN) in Mumbai and Delhi. The company mentions that these networks are based on LoRa technology for connected devices and Internet of Things applications. It claims that the first phase of this initiative will aim to cover 400 million people in Tier 1, 2, 3 and 4 cities, although it didn’t mention by when it will accomplish this. The LPWAN wireless network can communicate up to 50 meters underground, making it useful in areas like metro stations and car parks.