Tata Comm sells Neotel stake to Econet for $430 mn

Tata Communications Ltd. of India is all set to sell its South African Internet-service subsidiary Neotel Pty Ltd. to Econet Wireless Global for around $430 million (ZAR 6.55 billion). The money will be used to repay Neotel debt and no money will come to Tata Communications, according to people familiar with the matter.

Tata Comm owns 68.5% stake in the company and tried to sell the company to Vodafone last year. Econet will get wireless spectrum and broadband access to South African businesses and homes with the acquisition. Neotel has debt of ZAR 5.1 billion and other debt is around ZAR 1.36 billion. “Hence, hardly any money will come to Tata Communications,” said an analyst.

The sale of the loss-making unit is part of Tata Group Chairman, Cyrus Mistry plans to exit loss-making businesses across the world. The group is in talks to sell its UK based steel business and is in talks with German firm, ThyssenKrupp to merge its rest of Europe business in 50:50 joint venture. Indian Hotels, operators of Taj group of hotels, has also announced that it wants to sell its Taj Boston hotel.