May 19, 2014 / 6:06 AM / 4 years ago

UPDATE 2-S.Africa's Vodacom prices Neotel deal at $676 mln

* Deal gives Vodacom large fibre optic network

* Vodacom also reports slight rise in FY profit

* Vodacom shares down 1.5 pct, Tata up 3.9 pct (Adds quotes, details)

By Helen Nyambura-Mwaura

JOHANNESBURG, May 19 (Reuters) - South African mobile operator Vodacom Group said on Monday it had reached an agreement to buy unlisted telecoms firm Neotel in a deal worth 7 billion rand ($676 million) although it would not assume any of the company’s debt.

Neotel, majority-owned by India’s Tata Communications , is South Africa’s second-biggest fixed-line phone operator and gives Vodacom a large fibre optic network for high-speed Internet.

“Effectively, they have to settle the debt. We are not going to take over existing debt,” Vodacom chief executive Shameel Joosub told reporters.

Both Vodacom and Tata declined to divulge further details of the agreement.

Neotel had net debt of 4.815 billion rand as of end-March, according to Tata Communications, which holds a 67.32 percent stake in the company.

Vodacom, which also reported a slight increase in annual profit on Monday, said it would fund the acquisition through available cash resources and existing credit facilities.

It posted a 2.8 percent rise in full-year earnings after bagging more subscribers across its African operations in Tanzania, Democratic Republic of Congo, Lesotho and Mozambique.

Its diluted headline earnings per share totalled 894.4 cents in the year to end March, from 870.2 cents a year ago.

Thirteen analysts polled by Reuters predicted an 8.6 percent rise in earnings per share to 945 cents. It declared an 825 cents per share dividend, lower than the 848 cents payout analysts had expected.

South Africa’s dominant mobile phone services provider said it increased users by nearly 14 percent to 57.5 million, with the most growth coming from other African businesses where the active customer base rose by nearly 22 percent to 26 million.

Vodacom shares were down 1.5 percent, lagging Johannesburg’s Top-40 index, which was up 0.25 percent at 0755 GMT.

Shares in Tata Communications, which last week reported its first consolidated annual net profit in five years, rose as much as 7.6 percent after news of the Neotel deal. The shares were trading 3.96 percent higher. (Addtional reporting by Tiisetso Motsoeneng in Johannesburg and Devidutta Tripathy in New Delhi; Editing by Ed Cropley)

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below