Neotel buys Transtel for R230m

By Damaria Senne, ITWeb senior journalist

Johannesburg, 11 Apr 2007

Neotel has purchased Transtel Telecoms, the commercial telecommunications arm of Transnet, for R230 million cash, pending the final signing of documents and approval of the deal by the Competition Commission.

Neotel MD Ajay Pandey says the deal, which will likely be concluded within the next 12 to 16 weeks, gives the second national operator long-distance infrastructure. This includes fibre, a national footprint and an enterprise customer base. It also provides skilled staff and revenue in excess of R400 million per annum, he says.

In August, Neotel acquired Transtel's telecoms infrastructure for R256 million. The new acquisition allows Neotel to leapfrog into the enterprise customer space, he says. This is a good starting point in view of Neotel's impending launch of enterprise services in the next month, he notes.

Pandey says the deal also brings Neotel 100 locations nationwide, a skills base and project management experience through the acquisition of 500 Transtel staff members. "Instead of having one location, Neotel becomes a 100-location company."

Karl Socikwa, head of restructuring at Transnet, notes in a media statement that the disposal of Transtel forms part of the group's non-core business disposal 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, he says.

100-day plan

Pandey says the company plans to be active in the next 100 days, ensuring the integration of Transtel infrastructure, customer base and staff into the company.

Following the allocation of the 800MHz spectrum to Neotel by the Independent Communications Authority of SA, the second national operator will undertake a quick pilot to test its wireless phones before beginning the roll-out of its commercial services to consumers, he says.

The test will take place in selected areas in Johannesburg and Pretoria, and commercial offerings will begin soon after, Pandey says.

He would not commit to time frames during which commercial roll-out would take place. However, the Neotel Web site says the second national operator expects to bring voice and data services to consumers from June.

Pandey cautions there will be a phased commercial roll-out, so it will take time before Neotel's services will be widely available to South African consumers.