Telecom giant surrenders Neotel frequency spectrum in reworked $500M deal

December 8, 2015 7:24 AM

Vodacom bought Neotel, South Africa's second-biggest fixed-line operator, in a deal that gave it much-coveted radio frequency spectrum that would allow it to roll-out a high-speed 4G network to meet surging demand for data.

A shopper walks past a Vodacom shop in Johannesburg February 4, 2015. REUTERS/Siphiwe Sibeko

Vodacom said on Tuesday it would not buy Neotel's highly sought-after frequency network and would offer roaming deals to rivals to get a $500 million takeover of the fixed-line operator approved by South Africa's competition watchdog.

The unit of Britain's Vodafone made the changes to the deal after the Competition Commission, which investigates deals for anti-trust issues, recommended to the Competition Tribunal that the deal should be approved on condition that Vodacom waits two years before using Neotel spectrum.

Under the modified deal, Vodacom would only buy the assets related to Neotel's fixed-line business but not its frequency spectrum, the company said in a statement. Vodacom said it would offer roaming arrangements to all mobile operators including itself.

The Competition Tribunal adjudicates on findings of the Competition Commission.

The transaction to buy Neotel, owned by India's Tata Communications, was opposed by mobile rivals MTN Group and the unlisted Cell C in public hearings held by Africa's most advanced economy's communications regulator.

Vodacom said the Competition Tribunal is set to consider the revised deal at a pre-hearing on Dec. 10.

Vodacom was also required by the Competition Commission to invest 10 billion rand ($688.11 million) in a fixed-line network within the next five years and place a moratorium on job cuts.

($1 = 14.5325 rand)