Tata Comm increases stake in Neotel to 70%

The Tata group has bought another 30 per cent stake in South African network operator, Neotel, to increase its shareholding in the company to 70 per cent.

Tata Communications Managing Director and CEO Srinath Narasimhan said in a statement that Tata had bought the 30 per cent stake previously held by the South African para-statals, Eskom and Transnet.

The purchase of the shareholdings, he said, has made Tata Communications in association with Tata Africa Holdings a controlling shareholder in Neotel.

"This reaffirms Tata's commitment to its expansion and investment plans in the emerging regions of Asia, Africa and the Middle East," Narasimhan has said.

"We will support Neotel's efforts to provide global quality telecoms services in South Africa," he added.

The latest development follows an announcement a few days ago that Neotel and a South African cell phone provider, MTN, have signed an agreement to build a 5,000-km national fibre optic network in South Africa.

The managing director of Africa Analysis, Andre Will, has said that Tata would now have controlling powers in Neotel.

He added: "Now that Tata has a 70 per cent shareholding, it could mean an easier process in acquiring financing, changing the brand, and other strategic decisions. Depending on the new shareholders' agreement, it could have the same powers as if it had a 100 per cent shareholding."