The stock has rallied 13.3% in past two trading days from Rs 188 on September 30, on the BSE as compared to 1.6% rise in benchmark index.
Analysts say the deal will be beneficial given that it will help Tata Comm pare down its consolidated debt of Rs 12,000 crore as well as improve profits. Neotel, which accounts for 11% of consolidated revenues, was a loss-making entity and has a debt to the tune of Rs 3,000 crore, the Business Standard report suggests.
The deal is reportedly valued at $500 million (Rs about Rs 3,130 crore) but the companies have not mentioned an amount so far.
Neotel, South Africa's second-biggest fixed-line phone operator is 68.5% owned by Tata Communications.
Speaking about the transaction, Vodacom Group CEO Shameel Joosub said, there are a number of important steps that we still need to complete in order to conclude the transaction. If the deal is implemented, Vodacom intends to put significant investment into the combined entity to provide high-speed fixed connectivity to many more businesses and consumers.