Liquid Telecom, the unlisted pan-African group majority owned by Econet Global, is buying South African telecoms company Neotel for ZAR6.55-billion ($428-million), it was announced on Tuesday.
The deal, which is subject to regulatory approval, will turn Liquid Telecom in the “largest pan-African broadband network” across 12 countries with “40,000kms of cross-border, metro and access fibre networks,” the group said in a statement.
This deal will give Liquid Telecoms, which already has a South African operation, a much larger presence in the  country. It already operates in Botswana, the Democratic Republic of Congo, Kenya, Lesotho, Rwanda, Uganda and Zambia, Zimbabwe and the UK. Liquid Telecom’s majority owner Econet is an African success story, which was founded by controversial Zimbabwean businessman Strive Masiyiwa.
To meet South Africa’s Black Economic Empowerment regulations, investment group Royal Bafokeng Holdings (RBH) will take a 30% equity stake in Neotel.
Neotel is currently majority owned by India’s Tata Communications, which saw it shares surge after the deal was announced.
Vodacom, the South African subsidiary of UK-listed Vodafone , withdrew from an R7-billion offer to buy Neotel in March, citing delays and frustration at the regulator and competition authorities slow pace in approving the offer, which was first made in May 2014.
“We are excited about this transaction. Leveraging the strengths of Liquid Telecom, RBH and Neotel, we will offer an unprecedented fibre network with a unique set of services and international connectivity for telecom operators and enterprises across sub-Saharan Africa,” Liquid Telecom CEO Nic Rudnick said in a statement.
“For the first time, African companies will be able to connect with each other in a cost effective and reliable way, all on a single fibre network. We will also be increasing investments into Neotel to cater for rapidly accelerating mobile and enterprise traffic, enabling us to launch exciting new products and services.”
Tata Communications CEO Vinod Kumar 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.”
Kennedy Memani, Neotel non-executive director, said the transaction would be submitted to South Africa’s communications regulator “Icasa, the Competition Commission and then the Competition Tribunal for approval. We expect this process to be concluded by the end of the current financial year”.