Liquid Telecom & RBH Agree to Acquire Neotel

On Tuesday, Liquid Telecom, a privately owned Pan-African telecoms group majority owned by Econet Global, announced that it has entered into an agreement to acquire South African communications network operator Neotel.

The shareholders of Neotel –Tata Communications of India and minority shareholders led by Nexus Connexion (Nexus) – have agreed for Liquid Telecom to acquire Neotel for ZAR 6.55bn.

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.

The transaction, which is subject to regulatory approvals, is transformative and will create the largest pan-African broadband network.

Through a single access point, businesses across Africa will be able to access 40 000kms of cross-border, metro and access fibre networks. These currently span 12 countries from South Africa to Kenya, with further expansion planned.

Commenting on the transaction, Nic Rudnick, Liquid Telecom CEO, said: “We are excited about this transaction. Leveraging the strengths of Liquid Telecom, RBH and Neotel, we will offer an unprecedented fibre network with a unique set of services and international connectivity for telecom operators and enterprises across sub-Saharan Africa. For the first time, African companies will be able to connect with each other in a cost effective and reliable way, all on a single fibre network. We will also be increasing investments into Neotel to cater for rapidly accelerating mobile and enterprise traffic, enabling us to launch exciting new products and services.”

Albertinah Kekana, Royal Bafokeng Holdings CEO, said: “This transaction is part of our diversification strategy and its focus on infrastructure is in line with our objective to invest in high growth 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.”

Speaking on behalf of Tata Communications, Neotel’s majority shareholder, Vinod Kumar, MD and CEO, 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.”

Nexus, Neotel’s minority shareholder, also welcomed the transaction.

Speaking on behalf of Nexus, Kennedy Memani, said: “We welcome this transaction with Liquid Telecom and RBH. It will see the sale of Neotel to new shareholders who have the vision, expertise and funding to continue to grow the company and to allow it to reach its full potential in South Africa and across the African Continent.  We are confident that customers and employees will benefit from the transaction and from the resulting stability and business expansion.”

The transaction is subject to approval by South African regulatory authorities and is expected to be completed later this year.

Liquid Telecom was advised by The Standard Bank of South Africa Limited (lead advisor, mandated lead arranger and global coordinator) and UBS.

Liquid Telecom is a subsidiary of the privately held and diversified telecommunications group Econet Wireless Global.

With over 1000 employees, Liquid Telecom is the leading independent data, voice and Internet provider operating across Eastern, Central and Southern Africa.

It supplies fibre optic, satellite and international carrier services to Africa’s largest mobile network operators, Internet service providers and businesses of all sizes. It also provides payment solutions to financial institutions and retailers, as well as data storage and communication solutions to businesses worldwide.

Econet is also a diversified telecommunications group with operations and investments in Africa, Europe, South America, and the East Asian Pacific Rim.

It offers products and services in the core areas of mobile and fixed telephony services, broadband, satellite, optical fibre, and mobile payments.

Strive Masiyiwa is the founder and Chairman of Econet Wireless, as well as of Liquid Telecom.

He was recognised by Fortune Magazine’s annual “World’s 50 Greatest Leaders” in 2013 at 35 on the list

RBH is a community based investment company and is the primary investment vehicle of the Royal Bafokeng Nation (RBN), a community of approximately 150 000 Setswana-speaking people with substantial minerals-rich land holdings in South Africa’s North West Province.

The Royal Bafokeng Development Trust is the sole shareholder of RBH, whose investment activities are aimed at generating the income required for the funding of sustainable projects that will benefit the Bafokeng community.

RBH has assets spread across the mining, financial services, infrastructure, oil and gas services, and industrial sectors. As at 31 December 2015, RBH net asset value was R32bn.

While Tata Communications Limited (CIN no: L64200MH1986PLC039266) along with its subsidiaries (Tata Communications) is a leading global provider of A New World of Communications™. With a leadership position in emerging markets, Tata Communications leverages its advanced solutions capabilities and domain expertise across its global and pan-India network to deliver managed solutions to multi-national enterprises, service providers and Indian consumers.

The Tata Communications global network includes one of the most advanced and largest submarine cable networks and a Tier-1 IP network with connectivity to more than 240 countries and territories across 400 PoPs, as well as nearly 1 million square feet of data centre and collocation space worldwide.

Neotel, however, offers tailored, innovative solutions based on voice, internet and data services to help large and small businesses and ECS/ECNS licensees to drive down communication costs, increase productivity and gain competitive advantage.

Neotel has rolled out an extensive metro and national long-distance next generation network, powered by a high-performance fibre optic core with availability exceeding 99.999%.

Neotel operates Tier 3 Data Centres in Johannesburg and Cape Town and directly connects the major centres in South Africa to the world via all 5 undersea cables. Neotel offers fresh thinking, a collaborative approach and a willingness to help its customers challenge the status quo. Leveraging its global reach, people and partners, Neotel delivers superior Network and Managed Services through continuous innovation, world-class technology and exceptional customer service. Neotel - because better communication inspires possibilities.

Also mentioned in the acquistion deal is Nexus, a broad-based BEE structure, comprising of the following shareholders amongst others, SADTU and NEHAWU,  Nozala, Youth Groups and various other provincial shareholders. It was funded by IDC and DBSA and have been involved with Neotel since inception.

The founder of Nexus Connexion, Kennedy Memani has also served as a Director of Neotel over the duration of investment working side by side with Tata Communications Limited (TCL).