Regulators are taking extraordinarily long to weigh up a number of big deals, including Vodacom’s proposed acquisition of Neotel, while the industry waits on tenterhooks for news that could change the sector.
A number of significant deals that could ultimately transform telecommunications in South Africa — for the better or for the worse, depending on who one talks to — are being scrutinised by both the Competition Commission and communications regulator Icasa.
Chief among them is the R7bn Vodacom, Neotel deal, with the parties waiting the best part of a year for regulatory clearance.
But other transactions are arguably just as game-changing, including Telkom’s second attempt to buy out IT group Business Connexion for R2,7bn and the proposed mobile network sharing deal between Telkom and MTN.
On Vodacom and Neotel, Icasa held public hearings in January 2015, but has yet to make a decision. And the Competition Commission says simply it’s still working on the deal.
Acting deputy commissioner and head of mergers and acquisitions Hardin Ratshisusu at the Competition Commission has defended the length of time it’s taken to make decisions on the various transactions.
He says the commission has been “engaging the merging parties throughout the investigation and they are well aware of the complexities of the issues under investigation”.
“The time an investigation takes depends on the issues under investigation,” he says. “Most merger investigations are finalised within a very short space of time. However, this particular investigation is quite complex and will not be rushed for the sake of expediency.”
In an earlier conversation with TechCentral, commission spokesman Mava Scott said he believed that the regulator’s processes around the Neotel/Vodacom deal were about 80% finalised.
“New submissions were made by Vodacom and other players. The issues are so complex that we don’t want to take a shortcut and would rather make an informed decision based on a proper analysis of the matter.”
Once the commission has made a decision, its recommendations will be handed to the Competition Tribunal.
If the deals are approved, and assuming there are no objections, then the go-ahead can be given in as little as two weeks. However, if other roleplayers in different markets affected by the deal object, the process could drag out longer.
When Vittorio Colao, the CEO of Vodacom parent Vodafone, visited South Africa last month, he expressed concern to journalists about how long the process was taking.
Vodacom and Neotel rivals MTN and Cell C have objected to the deal, saying it would entrench Vodacom’s dominance in the market. Cell C has objected to the deal outright, while MTN has said it believes Neotel’s spectrum ought to be handed back to the industry in accordance with Icasa regulations.
Business Connexion shareholders voted in favour of Telkom’s offer to purchase in August last year. Telkom CEO Sipho Maseko said at the time that the deal would help the predominantly fixed-line telecoms operator grow beyond its core business of connectivity and expand into end-to-end ICT services. Business Connexion was hoping to have finalised the deal by December at the latest.
In a surprise move, Business Connexion in February pulled the plug on its application to Icasa for approval of a transfer of control of its licence to Telkom, saying that it wasn’t required. In a statement in March, Icasa said it was still engaging both parties on the proposed deal.
The two companies are still awaiting approval from the Competition Commission for the deal to go ahead.
In the final big industry deal, in March 2014 Telkom confirmed that it was in talks with MTN about a transaction that would result in the latter managing the former’s radio access network. There would also be an expansion of the current bilateral roaming agreement between the operators. Cell C objected to this deal, while Vodacom is understood not to have opposed it in light of the proposed Neotel acquisition. This deal is also awaiting a decision from the commission. — © 2015 NewsCentral Media
