M&A Africa: Liquid-Neotel Deal To Create Africa’s Largest Broadband Company

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Written by Kevin Mwanza

London-based Liquid Telecom, a subsidiary of Econet Wireless Global, has acquired South Africa-based communication network operator Neotel for about $430 million effectively creating the largest independent internet broadband operator in Africa, Financial Times reported.

The deal, which is still awaiting regulatory approval, will make Liquid the “largest pan-African broadband network” with over 40,000 kilometres of internet fibre across 12 countries on the continent, the group said in a statement.

Its network currently covers 24,000 kilometers.

Liquid already has little presence in South Africa and also operates in Botswana, the Democratic Republic of Congo, Kenya, Lesotho, Rwanda, Uganda, Zambia, Zimbabwe and the UK.

It partnered with South African empowerment investment group Royal Bafokeng Holdings (RBH) in the deal. RBH will take a 30 percent stake in Neotel once the deal is done.

“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 the statement.

Largest Broadband Company

The group has in recent years focused on providing fibre broadband to the continent’s densely populated and fast growing cities.

The acquisition will give it an opportunity to create a scalable platform for its rapid expansion into new African markets, The Herald reported.

In 2014, South Africa’s largest mobile phone company Vodacom offered 7 billion rand to acquire Neotel – the country’s second largest fixed-line operator after state-owned Telkom–, but abandoned the bid in May this year citing “regulatory complexities”.

Liquid’s acquisition of Neotel is however expected to sail smoothly with the tough South African regulators, an unnamed Liquid Telecom representative told Fin24.

“We hope to have completed the transaction before the end of the year,” the representatives told Fin24.

“Liquid Telecom’s existing operations in South Africa are very limited in size, so the competition issues are of a much smaller scale than those arising from the failed Vodacom deal. We do not believe there are any major competitive issues.”