Tata Communications renegotiating Neotel sell-off

Tata, which owns 68% in the South African telecom firm, had agreed in May to sell its stake for $498 mn

Long distance telephony company Tata Communications said the shareholders of Neotel - its majority-owned South African telecom firm - are in talks with Vodafone South Africa for a revised transaction structure for the sale of Neotel.

In May last year, Vodafone's South African subsidiary Vodacom had agreed to buy Neotel for 7 billion rand. In dollar terms, the value of transaction at that time was around $676 million, which has come down to $498 million due to depreciation in the value of the local currency.

“Neotel's shareholders are now in discussions with Vodacom South Africa regarding a revised transaction structure," Tata Communications said in a regulatory filing. Tata Communications owns over 68 per cent stake in South Africa's largest fixed line telephone service provider Neotel.

“The outcome of these discussions will directly impact the extent of the approval being sought from the Competition Tribunal and the scope of the hearing. Accordingly, Neotel and Vodacom South Africa have requested that the hearing be postponed,\" Tata Communications said.

The details applicable to the postponement would be determined at a Competition Tribunal hearing in Johannesburg, it added. Tata Communications’ scrip was down by 0.1 per cent to Rs 434.2 a share on the BSE on Monday.