Acquisition of Transtel by Neotel
March 19, 2008
Neotel is pleased to announce that the Competition Tribunal
of South Africa has approved its acquisition of Transtel,
the telecommunications division of Transnet without any
conditions. The approval fulfils the final condition precedent
to the conclusion of the transaction following the sale
agreement reached between Neotel and Transnet in December
2007.
A phased integration process aimed at
maximising the assets, infrastructure and competencies
of the two organisations will begin with immediate effect.
Neotel views the acquisition of Transtel
as a strategic move to address a broader enterprise
market. Transtel, with over 100 locations nationwide,
will enable Neotel to deliver and support telecommunications
services to address this market sooner than otherwise
possible. Ajay Pandey, the MD and CEO of Neotel says,
"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 nation-wide
presence instantaneously, and therefore the ability
to serve the diverse and geographically dispersed needs
of our customers." Transtel is also amongst the
few employers of voice and data telecommunication skills
in South Africa, and hence Neotel will gain from the
pool of more than 500 staff, most with very scarce competencies
in these fields. On the revenue front, Transtel would
bring to Neotel a revenue base of around R600 million
from large enterprise customers, including Transnet.
For Transnet, the sale marks another milestone
as it completes its transformation. Over the last couple
of years, Transnet, the state-owned enterprise, has
transformed into a focused freight transport and logistics
services provider with assets in ports, rail and pipelines
to service its customers in the bulk and manufacturing
sectors. Commenting on the transaction, Transnet Group
Executive Karl Socikwa says, "This asset fell outside
our core focus of rail freight, ports and pipelines
and having bedded down the turnaround, our focus now
shifts on gearing up the company for volume-led growth
through investment into capacity expansion. This sale
will enable specialists in this highly specialised area
to unlock value in this valuable asset."
Ajay Pandey adds, "Over the next
month, we will be communicating directly with our customers,
suppliers and other associates regarding the roadmap
of the integration process and how it will affect them
specifically."
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