Why would Transnet be interested in selling off Transtel to Neotel?
 
The disposal of Transtel will fit Transnet’s ‘four-point turnaround strategy’ perfectly and any transaction benefiting Neotel will surely be beneficial to Transnet as well.
 
“As part of its four-point turnaround 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. All other businesses are being disposed of by the Group. The disposal of Transtel Telecoms forms part of this non-core business disposal strategy” (Neotel to buy Transtel, MyADSL, 11 April 2007). This is according to Head of Restructuring at Transnet, Karl Socikwa.
 
In other words, Transnet is disposing of its non-core businesses and since Transtel can be described as non-core, Transnet will be more than happy to see Transtel go.
 
‘Transnet and electricity utility Eskom together own 30 percent of Neotel. The two parastatals have transferred their long-distance telephone infrastructure to Infraco, the new company that aims to rapidly reduce broadband internet costs in South Africa’ (Neotel boosts national presence with R230m Transtel purchase, Mochiko, 12 April 2007).
 
In other words, any transaction benefiting Neotel will surely be beneficial to Transnet as well because of Transnet’s stake in Neotel.
 
How can the transfer of Eskom and Transnet’s ‘…long-distance telephone infrastructure to Infraco…’ be seen as positive from Neotel’s point of view?
 
Well, ‘Infraco will sell internet bandwidth capacity to Neotel, which has secured a four-year exclusivity period’ (Neotel boosts national presence with R230m Transtel purchase, Mochiko, 12 April 2007).
 
In other words, even with the long-distance telephone infrastructure in the hands of Infraco, neither Neotel nor us will complain about the state of affairs because of obvious reasons.
 
Will anything be left of Transnet if Transtel becomes part of Neotel?
 
‘Transtel excludes only Transnet’s core rail and harbour operational communications services required to support the transport operations, which will remain within Transnet’ (Neotel boosts national presence with R230m Transtel purchase, Mochiko, 12 April 2007).
 
In other words, Transnet will be left with its core businesses intact.
 
What about regulatory approval of the transaction?
 
We don’t expect any problems in regard to regulatory approval.
 
‘The transaction is subject to various regulatory approvals, including the Competition Commission’ (Neotel to buy Transtel, MyADSL, 11 April 2007).
 
In other words, the Competition Commission among other regulatory bodies must give the transaction the go ahead. 
 
ADSL South Africa (Broadband South Africa) welcomes any transactions like the above that will surely give Neotel the extra muscle that’s needed to take the likes of Telkom head on.