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

Reuters Posted online: Tuesday, Oct 01, 2013 at 0000 hrs
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.