Vodacom Group Ltd.’s (VOD) proposed takeover of Tata Communications Ltd. (TCOM)’s South African unit will boost its revenue from business customers by about 50 percent, according to a person involved in the talks.
The acquisition of Neotel Pty Ltd. will accelerate a push for Vodacom Business, the corporate unit of the biggest provider of mobile phone services in South Africa, to contribute as much as 25 percent of the carrier’s South Africa service revenue by 2018, according to the person, who asked not to be identified because the talks are private.
In the year ended March 30 the unit accounted for 8 billion rand ($800 million), or 16 percent, of Vodacom’s total revenue. Acquiring Neotel from Mumbai-based Tata Communications will add 4 billion rand to sales, the person said.
Vodacom is in talks to buy Neotel for more than 5 billion rand, a person familiar with the discussions said on Sept. 27, declining to be identified because an announcement had not been made. The Johannesburg-based company confirmed the talks on Sept. 30 and two people familiar with the discussions said on Oct. 1 the acquisition will involve the assumption of about $500 million in debt.
Vodacom shares were down 1.1 percent at 125.81 rand as of 1:27 p.m. in Johannesburg, giving it a market value of 187.1 billion rand.
Neotel is valued at 5.6 billion rand to 9.9 billion rand because of its spectrum and market share of the small- to medium-business market, according to HSBC Global Research analyst Rajiv Sharma. Read more at Bloomberg.