Tata Communications shares rallied over 7 per cent in early trade on Tuesday after the company informed bourses that Liquid Telecom, a pan-African telecoms group, majority owned by Econet Wireless Global, has entered into an agreement to acquire South African communications network operator Neotel. Neotel is a subsidiary of Tata Communications.
At 9.26 am, shares of Tata Communications shares were trading 7.60 per cent up at Rs 483.75. The scrip opened at Rs 478 and has touched a high and low of Rs 486 and Rs 475, respectively, in trade so far.
Later, Tata Communications shares settled 2.44 per cent up at Rs 460.55.
The shareholders of Neotel have agreed for Liquid Telecom to acquire Neotel for ZAR 6.55 billion (around Rs 2,900 crore). Liquid Telecom is partnering with Royal Bafokeng Holdings (RBH), a South African empowerment investment group, which has committed to take a 30 per cent equity stake in Neotel.
The transaction, is subject to obtaining all affirmative approvals and other corporate approvals that may be required by the shareholders of Neotel and the regulatory approvals in South Africa.
Speaking on behalf of Tata Communications, Neotel’s majority shareholder, Vinod Kumar, Managing Director and CEO in a release said, “Liquid Telecom is the right partner for the next phase of Neotel’s evolution. Convergence of technologies and services will be the key driver of growth across the globe and this transaction will encourage inclusion and support the growth aspirations of the African continent. We believe that Liquid Telecom will deliver on the vision of a well-connected Africa, which will augur well for the South African telecom industry and Neotel’s customers.”
The transaction is subject to approval by South African regulatory authorities and is expected to be completed later this financial year.