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The buyout of Tata-led South African telecom company Neotel by Vodacom, if it goes through, will lead to job cuts, and do little to reduce the digital divide, country's Wireless industry body WAPA has said.
Last week, British major Vodafone's South African subsidiary Vodacom had said that it has entered into exclusive discussions regarding a potential acquisition of Neotel, controlled by Tata Communications.
Subodh Bhargava, Chairman of Tata Communications that holds 68.5% stake in Neotel — South Africa's second-biggest fixed-line phone operator — confirmed that the companies are in talks.
In a statement, Wireless Access Providers' Association (WAPA), the self-regulatory body for the industry, said the takeover would stifle competition, lead to job cuts, and do little to reduce the digital divide that it believes should be South Africa's top priority with regard to broadband.
WAPA said it had seen an increase in membership exceeding 25% per year, as smaller operators seize the gap created in the broadband market, particularly with respect to last-mile access.
"The growth in smaller operators is good for the customer and good for the country," WAPA Chairperson Christopher Geerdts said.
"It increases competition, creates jobs and drives rural broadband penetration. Larger operators tend to cut jobs and cherry-pick customers in the most lucrative suburbs and business parks."