Transtel to become part of Neotel

ADSL South Africa (Broadband South Africa), 19 April 2007

In what comes as a step in the right direction Transtel Telecommunications (TT) has in principal accepted Neotel’s (SNO’s) offer to buy it for R230m. TT is ‘…the commercial telecommunications arm of Transnet’ (Neotel to buy Transtel, MyADSL, 11 April 2007).
 
‘Neotel has agreed to buy Transtel Telecommunications for R230 million and will start the trials of its wireless voice and internet services following the recent allocation to it of the 800MHz spectrum’ (Neotel boosts national presence with R230m Transtel purchase, Mochiko, 12 April 2007). This comes after Neotel ‘…bought Transtel's 1 300km fibreoptic cable network for R256 million two months ago’ (Neotel boosts national presence with R230m Transtel purchase, Mochiko, 12 April 2007).
 
In other words, Neotel will fork out a further R230 million for Transtel bringing the total amount spend to R486 million if one takes the previous transaction of R256 million into account.
 
When will the deal be finalised?
 
According to Neotel (SNO) the deal will be finalised ‘…in the next four months’ (Neotel boosts national presence with R230m Transtel purchase, Mochiko, 12 April 2007).
 
In other words, before Christmas this year Transtel should be in Neotel’s pocket.
 
Why Transtel?
 
It makes business sense since Neotel (SNO) will benefit in many ways such as the following:

• Increased revenue  – Roughly R400 million a year will be added to Neotel’s revenue or turnover.

• Scarce skills – ‘Transtel Telecoms, which has an employee strength of 500 people, is amongst the few employers of voice and data carrier telecom skills in South Africa, and hence Neotel will gain from the pool of, otherwise scarce, skills in these fields’ (Neotel to buy Transtel, MyADSL, 11 April 2007).
   
  In other words, Neotel will have access to a pool of skilled workers.

• Nationwide network – Neotel will also have access to a ‘…100 nationwide locations, and access to a long-distance and metropolitan area network’ (Neotel boosts national presence with R230m Transtel purchase, Mochiko, 12 April 2007. Neotel’s MD, Ajay Pandey, said: “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” (Neotel to buy Transtel, MyADSL, 11 April 2007).
   
  In other words, the acquisition of Transtel will give Neotel instant access to a nationwide network.

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