As part of the agreement, Liquid Telecom - majority owned by Econet Wireless Global - is partnering with the South African empowerment investment group Royal Bafokeng, which has committed to acquire a 30% equity stake in Neotel. An earlier potential agreement with Vodacom had collapsed in March 2016 as a result of regulatory complexities.
The deal is said to create the largest pan-African broadband network, spanning 40,000km of fibre networks in 12 countries from South Africa to Kenya.
"We are excited about this transaction. Leveraging the strengths of RBH, Neotel and Liquid Telecom will offer an unprecedented fibre network with a unique set of services and international connectivity for telecom operators and enterprises across sub-Saharan Africa," said Nic Rudnick, CEO of Liquid Telecom.
Liquid Telecom intends to use the single fibre network to launch products and services aimed at African businesses. "We will also be increasing investments into Neotel to cater for rapidly accelerating mobile and enterprise traffic," Rudnick added.
Albertinah Kekana, CEO of Royal Bafokeng Holdings, said the transaction is part of its divestment strategy and aligns with its objectives to invest in high growth infrastructure sectors. "As a long term investor, we are pleased to be partnering with Liquid Telecom who has a very credible track record in rolling out fibre in challenging and diverse markets. This deal represents our long-term investment approach and our commitment to the African growth story," said Kekana.
Vinod Kumar, managing director and CEO of Tata Communications said Liquid Telecom is the right partner for the next phase of Neotel's evolution.
“Convergence of technologies and services will be the key driver of growth across the globe and this transaction will encourage inclusion and support the growth aspirations of the African continent. We believe that Liquid Telecom will deliver on the vision of a well-connected Africa, which will augur well for the South African telecom industry and Neotel’s customers,” said Kumar.
The transaction is subject to approval by South African regulatory authorities and is expected to be completed later in the financial year.
