South Africa’s Mobile Phone Sector Faces Consolidation

The $676.8 million Vodacom/Neotel deal has revealed a drift in the direction of “greater levels” of consolidation in South Africa’s mobile phone sector, corporate law firm, Bowman Gilfillan, said late Monday.  “South Africa’s telecommunications industry is in a state of flux. The market is maturing,” said Lloyd Chater, the director at Bowman Gilfillan, which advised Tata Communications, the owners of Neotel, on the deal.

Vodacom, in a move set to trigger competition in South Africa’s fixed line sector, Monday said it had acquired 100 percent of privately-owned fixed line operator, Neotel, for R7 billion ($676.8 million).  Vodacom said it will finance the acquisition of South Africa’s second biggest fixed line operator after Telkom, by using available cash resources and existing credit facilities.

It is likely that the merged firm will expand network accessibility and lessen the cost to serve clients, Bowman Gilfillan advised.  According to the law firm, the firm will also be perfectly placed to increase broadband connectivity in line with the Government’s broadband targets.  Furthermore, this will allow Vodacom to take a leading position in the ‘fiber to the home’ and ‘fiber to the enterprise’ segments, according to Bowman Gilfillan.

Source: Ventures Africa