Tata Communications sells African fixed-line asset for Rs 2920 crore

 Four months after its deal with Vodacom collapsed,Tata Communications on Tuesday said that it has agreed to sell its South African fixedline unit Neotel to Econet Wireless Global for Rs 2,920 crore, said a report in the Times of India. The transaction, subject to regulatory approvals, will help the Vinod Kumar-led Tata Communications pare its Rs 9,600-crore debt and to focus on its core data services business.Tata Communications shares  were up by 2.4% on Tuesday.

Tata Communications, which acquired Neotel in 2009, owns nearly 69% in the telecom company with the rest being held by Nexus Connexion, a South African empowerment investment group. As part of the deal, 70% of Neotel will be sold to Liquid Telecom, an affiliate of Econet. The remaining 30% will be bought by Royal Bafokeng Holdings, a South African empowerment investment group. Econet, a diversified telecom group, is owned by Zimbabwe's richest person Strive Masiyiwa.

In March, the Neotel deal between Tata Communications and Vodacom, a unit of the UK-based Vodafone, was terminated after a two-year regulatory battle and opposition by competitors. This time, however, Tata Communications is confident that the transaction with the Liquid Telecom-Royal Bafokeng alliance will go through.

"We don't see a problem with the deal, although it requires competition commission as well as telecom regulatory authority approvals. We don't see that to be too much of a challenge given that Liquid Telecom doesn't have a presence in South Africa and hence it will not put them in an unfair competitive advantage," Pratibha Advani, CFO of Tata Communications, told a business news channel. The Neotel divestment forms part of the Tata Group's strategy to offload non-core assets as the conglomerate looks to reduce debt and boost earnings. The $109-billion group's various companies, such as Tata Steel and Indian Hotels Company , are in the midst of disposing some of their overseas assets to cut losses.