Tatas to invest in South African telco InfraCo

ET reports that Tatas are picking up 26% in InfraCo, a new telecom company in South Africa. The remaining stake in the company will be held by the South African government.

The joint venture will be the third network operator in South Africa, and apart from offering long distance services within the country, it will also build and operate marine telecom infrastructure for international long distance (ILD) traffic.

The investment of $60m will be routed through VSNL, Tatas’ long distance arm.

VSNL already has a 26% stake in the South Africa’s SNO Telecom, which has licence to provide all telecom services, except mobile services. The Tatas have already announced an investment of about $250m in SNO Telecom, which is slated to launch services by the month-end and become the country’s second fixed-line service provider.

The JV may lead to complications in the South African telecom market due to the different cross holdings involved.

The Tatas will have stake in both SNO Telecom and InfraCo, who together will control significant chunks of the telecom infrastructure in South Africa.

The government currently holds 37% stake in mobile operator Telkom, will also own 74% in InfraCo, with both companies competing in the infrastructure space.

VSNL owns Tyco, one of the largest players in the ILD space.

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