South Africa’s largest mobile operator Vodacom has confirmed that it has entered exclusive discussions regarding a possible 100% acquisition of the shares of fixed line operator Neotel.

Vodacom dominates South Africa’s mobile landscape with over 30 million subscribers: more than 50% of the total market.

Meanwhile, Neotel, which describes itself as a converged telecommunications operator, competes head-on with Telkom in South Africa’s fixed line segment. India's Tata owns more than 60% of Neotel.

A statement from Vodacom says the “finalisation of the transaction is subject to the successful conclusion of commercial negotiations and receiving the requisite regulatory and corporate approvals.”

A Bloomberg report has said the deal could be worth over $500 million.

“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,” says Vodacom Group chief executive officer Shameel Joosub in a statement.

“By further building on the capabilities within Neotel, we would also aim to develop entirely new services such as fibre to the home and business. Neotel has access to over 15,000km of fibre-optic cable, including 8,000km of metro fibre in Johannesburg, Cape Town and Durban.

“Spectrum is also an important consideration as the combined entity could use this resource more efficiently, and in doing this we can keep pace with South Africa’s rapidly growing demand for mobile data. This transaction is all about providing greater choice and better infrastructure for South Africa’s businesses and consumers.”

Sunil Joshi, Neotel CEO, said: “We believe this presents an exciting and attractive opportunity for all parties, especially our customers to whom we will be able to offer more meaningful and innovative products and services. This transaction, if concluded, would further enable Neotel to extend its footprint in South Africa and add the mobile capability that our customers require for their business’ growth in a new world of converged communications.