Tata Communications Said Near Sale of Neotel in South Africa

  • Econet Wireless said poised to buy Tata’s 68.5% stake in ISP
  • Price would value Neotel at $389 million to $454 million

A worker lays cabling for a high speed telecommunications line for Neotel Ltd., a fixed-line operator part-owned by Tata Communications Ltd., in the center of Johannesburg.

Photographer: Nadine Hutton/Bloomberg

Tata Communications Ltd. of India is close to an agreement to sell a majority stake in South African Internet-service provider Neotel Pty Ltd. to closely held telecommunications company Econet Wireless Global, according to people familiar with the matter.

Econet is discussing buying Tata’s 68.5 percent stake at a price valuing Neotel between 6 billion rand and 7 billion rand ($389 million to $454 million), said one of the people, who asked not to be named because the negotiations are private. A deal may be announced as soon as Tuesday, the people said.

Representatives for Neotel and Johannesburg-based Econet declined to comment.

An acquisition would give Econet wireless spectrum and broadband access to South African businesses and homes. The company, founded and run by Strive Masiyiwa, controls Africa-focused Internet provider Liquid Telecom and mobile-phone company Econet Wireless Zimbabwe Ltd.

For Tata, a transaction would advance an asset-sale push the coffee-to-cars conglomerate has been pursuing as Chairman Cyrus Mistry seeks to pare debt and boost profit. Tata Steel Ltd., Tata Power Co. and Indian Hotels Co., which wants to sell its Taj Boston hotel, are among group firms looking to dispose of non-core assets.

Four months ago, Johannesburg-based Vodacom Group Ltd. abandoned a 7 billion-rand proposal to buy Neotel after almost two years of regulatory battles and legal opposition to the deal by competitors.