Neotel, Vodafone renegotiating $498 million acquisition deal

Tata Communications on Monday said that shareholders of its majority-owned South African telecom firm Neotel and Vodafone South Africa are in discussion over a revised transaction structure of the deal.

The deal was signed in May last year, where Vodafone's South African subsidiary Vodacom reached an agreement to buy Neotel, controlled by Tata Communications, 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 value of South African rand.

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 said. 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 are to be determined at a Competition Tribunal hearing in Johannesburg today, it added.