Tata Communications is renegotiating a 7-billion-rand deal (about ₹3,950 crore) to sell its South African subsidiary Neotel to Vodacom SA.
In May, Tata Communications agreed to sell its entire 68 per cent stake in South Africa’s second-biggest fixed-line phone operator Neotel to Vodacom SA, a subsidiary of Vodafone Plc. The agreement was signed for an enterprise value of 7 billion rand.
The deal, which was expected to close by the end of this fiscal year, is one of the major divestments carried out by the Tata group as part of Chairman Cyrus Mistry’s strategy to exit non-core areas.
“Neotel’s shareholders are now in discussions with Vodacom South Africa regarding a revised transaction structure. The outcome of these discussions will directly impact the extent of the approval being sought from the Competition Tribunal and the scope of the hearing,” Tata Communications said in a regulatory filing without explaining why the deal had to be renegotiated.
The Competition Tribunal in South Africa, which looks into anti-trust issues, had earlier granted provisional approval for the deal. The Tribunal was scheduled to start hearings for the final approval on Monday.
However, with the two companies going back to the discussion table, Neotel and Vodacom have sought the hearing to be postponed.
Tata Communications and Vodacom have been in negotiations since September 2013, after the Tata group company decided to exit the venture.
The deal requires the Indian government’s approval as the Centre holds a 26 per cent stake in Tata Communications, formerly Videsh Sanchar Nigam Ltd (VSNL).
Tata Communications had acquired the stake in 2006, following the South African government’s initiatives to deregulate the telecom market, by paying $250 million. The company later raised its stake to 68 per cent.
Nexus Connection and Communitel are the other investors in Neotel. Vodacom was to acquire 100 per cent stake in the company.
Tata Communications shares closed down 0.12 per cent at ₹434.25 on the BSE, which ended down 0.19 per cent on Monday.