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Vodacom prepares to challenge Telkom

With its acquisition of Neotel, the company is setting its sights on the fixed-line market leader.

With its acquisition of Neotel, Vodacom is setting its sights on the fixed-line market leader. Picture: Supplied.

JOHANNESBURG - Vodacom is prepared to invest capital and time into taking on Telkom following its acquisition of Neotel, Chief Executive Officer (CEO) Shameel Joosub said on Monday.

The group revealed this morning that it had reached an agreement to buy the country's second-biggest fixed-line operator in a deal worth R7 billion.

Neotel, majority-owned by India's Tata Communications, will give Vodacom a large fibre optic network for high-speed internet.

This means the company can begin challenging the dominance of the parastatal in the market.

"I think we have the resources to put in," the Vodacom CEO told The Money Show on Monday.

"We see it as an opportunity to take fibre into businesses and homes."

Joosub says there will be a "dramatic improvement" in terms of services within two years, with Vodacom becoming a major player in the fixed-line market within five.

The announcement came along with the full-year profit report, which showed an increase of three percent.

The company also revealed its capital expenditure could be as high as R13 billion in the current financial year, with most of that in the local market.

Joosub however notes that this could fail to materialise should the direction of the mobile termination rate debate turn against his company.

_ Listen to the full interview from The Money Show here._

Additional reporting by Reuters