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Vodacom says ruling on licenses has no impact on Neotel deal

The Vodafone unit will buy fixed-line assets and Neotel will offer a roaming arrangement to all mobile-network operators.

Vodacom Group, the South African unit of Vodafone Group Plc, said a court ruling preventing it from taking control of licenses owned by Neotel won’t have an impact on its acquisition of the Internet provider.

The decision by the North Gauteng High Court on Friday comes two months after Johannesburg-based Vodacom agreed to amend the terms of the proposed R7 billion ($431 million) deal to exclude the permits, which are for spectrum and electronic-communications network services. The Vodafone unit will instead buy fixed-line assets and Neotel will offer a roaming arrangement to all mobile-network operators.

“The proposed modified transaction announced on Dec. 8, 2015 excluded Neotel’s spectrum and licenses, therefore today’s judgment has no bearing at all on the modified transaction,” Vodacom spokesman Byron Kennedy said in an e-mailed statement.

Vodacom agreed to buy Neotel from Tata Communications of India in May 2014 to increase its Internet offering amid tougher regulation and pricing in the South African mobile-phone market. The deal became mired in lengthy competition inquiries, while competitors including Telkom and MTN Group appealed against the tie-up, which they said would give Vodacom a dominant position in the high-speed Internet market.

Friday’s court decision was in response to an appeal by MTN, Telkom and mobile-phone company Cell C against a ruling by the Independent Communications Authority of South Africa to approve the transfer of control of licenses.

“Telkom welcomes the decision and believes that it was taken in the best interests of sustainability in the industry,” spokeswoman Jacqui O’Sullivan said in an e-mailed statement.

Vodacom shares declined 0.5% to R152.05 at the close in Johannesburg, valuing the company at R226 billion.

© 2016 Bloomberg News

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