Dimension Data has asked the Competition Tribunal to impose additional constraints on Telkom if the telecommunications operator is allowed to buy listed IT services company Business Connexion.
But BCX CEO Isaac Mophatlane has hit back, saying the market has changed dramatically in recent years and Telkom no longer has the dominance over the industry it once enjoyed. He argues that imposing further conditions on Telkom is unnecessary.
Didata Africa and Middle East CEO Derek Wilcocks tells TechCentral that the company decided to pursue further recourse from the Competition Tribunal because it fears Telkom could use its market position to disadvantage its competitors.
“We are not trying to get the deal stopped — I think that’s an important thing for me to emphasise — but what we are trying to ensure is that once the deal has gone through, we have a situation where relatively free competition is allowed,” Wilcocks says.
“Our concern, in a nutshell, revolves around two things. The first is on the input cost side of things, where we are worried that we could be foreclosed,” he says. “In essence, Telkom in many parts of the country, and for certain specific product sets, is still a very dominant player. We want to ensure we don’t end up in a situation where Telkom can provide those services to itself at prices that make it impossible for us to compete.”
The second leg of Didata’s concern is to do with bundling, Wilcocks says. “The Competition Commission has acknowledged there is some validity to our concerns, and I think the debate before the tribunal … is how can those concerns best be addressed.”
However, Mophatlane pooh-poohs the need for additional constraints to be imposed on Telkom. When Telkom made an approach to buy BCX in 2007, the market was very different, and Telkom was dominant. That’s changed completely, says Mophatlane. “There’s no dominance. They’re not the Telkom of old.”
He says, too, that the acquisition by Japan’s NTT Corp of Didata was “allowed to go through with absolutely no obstacles”. Unlike Didata, BCX, he says, has “no international aspirations. We are a pan-African player. We have no lofty ambitions of listing in London and taking the business to America or Europe.”
He describes Didata’s decision to seek additional concessions as “disappointing”. If the tribunal agrees to them, they “will be quite onerous on Telkom and BCX”.
Mophatlane has also criticised the competition authorities for taking a long time to consider the acquisition. He says new competitors, especially from India, are making the market tougher and each day the deal is delayed is costing BCX competitive ground. The delays have also made it difficult to attract new talent because of the uncertainty around the deal, he says.
The deal, when it happens, will lead to “significant consolidation” of the IT services market, Mophatlane adds. “Unfortunately, we are at the mercy of authorities and it’s just not proper that we have to wait this long.”
Telkom and BCX first approached the Competition Commission last August for the necessary approvals. “In this economy, we must make it easier to do business because we are bleeding jobs in every sector. You need decision making to be a lot swifter and more decisive in dealing with [things like] mergers and acquisitions.”
The Competition Tribunal is expected to conclude its hearings into the matter on Thursday, 6 August. It is then expected to make a formal decision on the matter later this month. — © 2015 NewsCentral Media
