TechCentral reported in early June that the mobile operator had made an offer to acquire a controlling 50% stake in the Internet service provider for an undisclosed sum.
“The commission on 29 October 2014 recommended to the Competition Tribunal to approve MTN’s acquisition of a 51% stake in Afrihost,” the regulatory authority said.
“The transaction presents horizontal overlaps in the activities of MTN and Afrihost in relation to the provision of hosting, ADSL and mobile data services at a retail level,” the commission said. “Afrihost also resells MTN’s ADSL and mobile data services, thus the merger also presents a vertical overlap.
“The commission’s assessment of the transaction found that MTN and Afrihost do not appear to be direct competitors because Afrihost focuses on small to medium enterprises and the residential segment, whereas MTN mainly focuses on large corporates, it said.
“For hosting services, the investigation shows that there are several large and reputable information and communications technology companies such as Internet Solutions, Business Connexion, Gijima and Vox Telecom, among others, active in the hosting market that are alternatives for customers to switch to,” it added.
“In the market for Internet access (ADSL and mobile Internet connectivity), Afrihost is a relatively small player and competes with MWeb Connect, Vox, Telkom Mobile and Vodacom, among others.”
The commission said it received objections to the transaction from competitors in relation to the “potential exclusionary conduct that may arise from the vertical relationship between MTN as a wholesaler of ADSL and mobile data and Afrihost as its reseller”.
“The commission is of the view that in both the ADSL and mobile data markets, it is unlikely the merger will give rise to foreclosure effects which are harmful to [small businesses] and residential customers, given the ability of these customers to easily switch mobile data service providers.
“In relation to the large corporates, since Afrihost does not provide services to these customers, MTN is already in a position to engage in such conduct before the merger.
“The concerns raised by third parties do not arise as a result of the merger and it is the commission’s view that the merger does not exacerbate this feature. Overall, the commission is of the view that the proposed transaction is unlikely to result in a substantial prevention and lessening of competition in the hosting, ADSL and mobile data markets.”
In the past couple of years, Afrihost has worked closely with MTN, with the telecoms operator providing the company with bandwidth and infrastructure for its ADSL clients. More recently, it has launched highly competitive mobile data deals on the back of MTN’s network.
“I sincerely believe that joining MTN is the best thing we can do for you, our clients and the rest of our team,” Afrihost CEO Gian Visser said in a letter to the company’s clients in June. — (c) 2014 NewsCentral Media