Liquid Telecom has today announced the acquisition of South African internet service provider Neotel, in a deal to create the continent’s largest broadband network and business-to-business service. Liquid Telecom, majority owned by Econet Global will pay $428 Million for the transaction. Econet Global is associated with Zimbabwean Billionaire Strive Masiyiwa and is also set to launch Kwese TV later this year.
Neotel was previously owned by Tata Communications of India who were the majority shareholders and Nexus Connexion (Nexus) as the minority shareholders. Liquid Telecom is partnering with Royal Bafokeng Holdings (RBH), a South African investment group, which has committed to take a 30% equity stake in Neotel. Tata Communications acquired the stake in Neotel in 2009 but has in the recent past been looking to dispose of its non-core assets. The transaction is subject to approval by South African regulatory authorities and is expected to be completed later this year.
Neotel has been up for sale severally with South African telco Vodacom making the initial bids for the company. Vodacom later abandons the deal citing regulatory complexities and certain conditions not being fulfilled. Vodacom planned to use Neotel’s fixed line network footprint and access to more radio spectrum to roll out faster broadband services. The exit of Vodacom saw the entry of undersea cable provider Seacom and Liquid Telecom with both companies looking to grow their broadband presence across the continent. According to News24, Neotel has in the last few years faced turbulent times including the resignation of its CEO over bribery allegations. Neotel was founded in 2006 as a competitor to South Africa’s Telkom.