The offer by South Africa’s second national telecommunications operator, Neotel, to purchase Transtel Telecoms, the commercial telecommunications arm of Transnet, has been accepted in principle by Transnet, the company said on Wednesday.
The proposed transaction, valued at R230-million, brings with it revenues of more than R400-million a year for Neotel.
The deal is subject to the negotiation and signing of a sale and purchase agreement and certain mandatory approvals, which the parties expect to conclude within the next 12 to 16 weeks.
Transtel has a value-added network services (Vans) licence, allowing Transnet to leverage its telecoms network to compete for the business of non-group companies as well.
Transtel Telecoms has been carved out of Transtel as a separate division catering to the commercial telecommunications services provided by the company, and excludes only Transtel’s core rail and harbour operational communications services required to support the transport operations of Transnet, which remain within Transnet.
Neotel’s acquisition of Transtel Telecoms, a profitable division in its own right, will bring with it favourable annual revenues from its various enterprise customers and a substantial telecoms infrastructure, the company said.
Transtel Telecoms, which employs 500 people, is among the few employers of voice and data-carrier telecom skills in South Africa, and hence Neotel will gain from the pool of otherwise scarce skills in these fields.
Ajay Pandey, MD of Neotel, said: “We are committed to exploring various options to ensure a faster entry into the market. This acquisition provides us a platform for introducing our next-generation services for businesses, providing us a nationwide presence instantaneously, and therefore the ability to serve the diverse and geographically dispersed needs of our customers.”
Karl Socikwa, head of restructuring at Transnet, said: “As part of its four-point turnaround strategy, Transnet is focusing its efforts on the deployment, operation and maintenance of an efficient freight-transport business with specific focus on rail, port and pipeline infrastructure and operations.
“All other businesses are being disposed of by the group. The disposal of Transtel Telecoms forms part of this non-core business disposal strategy.”
The transaction is subject to various regulatory approvals, including by the Competition Commission. — I-Net Bridge