Cell C made an impassioned plea to communications regulator Icasa on Thursday not to approve Vodacom’s proposed R7bn acquisition of Neotel, warning that the deal would result in a lessening of competition in South Africa’s telecommunications industry, which would be against the interests of consumers.
Cell C chief legal officer Graham Mackinnon said at public hearings at Icasa’s offices in Sandton that it was “quite obvious” from submissions made by Vodacom and Neotel that their proposed transaction was one where they “realised they needed to achieve a particular goal and reverse engineered a transaction to avoid restrictions in the Electronic Communications Act and radio frequency regulations”.
He said the companies had “created a structure” in an attempt to achieve this.
Mackinnon said the transaction involved the allocation of scarce radio frequency spectrum resources between telecoms licensees and was an “effective spectrum transfer”.
“This is prohibited by the Electronic Communications Act and radio frequency regulations,” he said.
He warned that there were already “signs of consolidation” that was leading to the “creation of duopolies and monopolies” in the industry.
“Such market structures are not conducive to competition and will not bring about competitive prices and choice to consumers in the long run,” Mackinnon said.
The proposed acquisition of Neotel would “further skew the playing field in the long term”. It would also “entrench Vodacom’s dominance”.
“Vodacom is already very dominant… [This deal would] severely reduce our ability to compete in this market. In a developing market, you don’t want consolidation that doesn’t enhance competition.”
The acquisition would give Vodacom access to new spectrum outside of a regulated assignment process. “Spectrum is a scarce commodity and must be allocated equitably in a a regulated environment. Consumers will lose out in the long run if Vodacom becomes super dominant in a space where they are already dominant.”
If it was allowed to proceed, the deal would “involve the elimination of an important competitor in the fixed and enterprise markets, while increasing the market power of an already dominant mobile operator”, Mackinnon said. “This transaction will entrench Vodacom’s dominance. This transaction is not in the public interest.” — (c) 2015 NewsCentral Media
- See also: Neotel offer Vodacom ‘breathing room’