Neotel sale talk: Tata Communications shares surge, Kotak says 'buy', target price Rs 250

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Acquiring Neotel would be a major boost to Vodacom's ambitions to grow its data business in Africa. (AP) Acquiring Neotel would be a major boost to Vodacom's ambitions to grow its data business in Africa. (AP)
SummaryTata Communications shares jump over Neotel, Vodacom deal talk.

Shares in Tata Communications Ltd gain 4.3 percent after South Africa's Vodacom Group - unit of Vodafone - said on Monday it was in exclusive talks to buy the company's unlisted local unit, Neotel, in a potential $590 million deal.

Acquiring Neotel would be a major boost to Vodacom's ambitions to grow its data business in Africa's largest economy.

"Every US$100 mn of deal equity value adds '15/share to fair value. However, we add a conservative '30/share and raise our target price to '250 and reiterate BUY," Kotak said in a report on Tuesday.

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