Something significant transpired on Friday last week that prompted South Africa’s largest telecommunications operator, Vodacom, to review the structure of its acquisition of Neotel, a company it has been pursuing doggedly for two years now.

Whatever happened on Friday was serious enough to warrant Vodacom to request a postponement of what were set to be high-profile public hearings at the Competition Tribunal at which its rivals would have argued strongly against permitting the deal to go ahead in its current form.

Neither party is saying anything, citing a confidentiality agreement between themselves and with Neotel’s shareholders, of which the largest is India’s Tata Communications.

And almost no information is leaking out, suggesting that a real clamp has been imposed on those involved in the talks.

All we know is what Vodacom communicated to the market on Monday.

In a statement to shareholders, issued on the stock exchange news service, the operator said the Competition Tribunal had given it until 7 December to inform both the tribunal and intervening parties — MTN, Cell C, Dimension Data and Telkom — whether the transaction will be continued in an amended form.

“A pre-hearing will be heard on 10 December 2015 to determine how to proceed. If it is decided that the transaction will continue in an amended form, a decision will be taken by the Competition Tribunal whether the hearing can continue as part of the present process,” Vodacom said in the statement.

The lack of any further information leaves the market to speculate about what exactly is going on. Fortunately, it’s possible to make a number of educated guesses about what might be happening. So, if you’ll permit me, I’ll set out three possibilities of what I think might be happening here.

The first centres on the bribery allegations against suspended CEO Sunil Joshi and suspended chief financial officer Steven Whiley. Neotel director in charge Kennedy Memani said on 14 October at a telecoms conference in Midrand that he expected the probe into the allegations to be wrapped up within two to three weeks. It’s been five weeks since he made those remarks, suggesting the findings are probably now known to both Neotel and Vodacom.

Joshi and Whiley were placed on “special leave” at the end of July following publication of a report in the Mail & Guardian that said Neotel may have made dodgy payments to a company called Homix in order to secure a telecoms contract worth R1,8bn from state-owned Transnet.

TechCentral has sought comment from Memani on whether the investigation has been wrapped up, but he had not returned a call or responded to an SMS by the time of publication.

There should be no presumption of guilt, but let’s assume, for the sake of the argument, that the report has not exonerated Joshi and Whiley and that the bribery allegations are true. As Business Day pointed out in an article on Tuesday, Vodacom CEO Shameel Joosub said earlier this month that his company would seek certain guarantees and securities to cover any potential liabilities that might arise as a result of the fraud and corruption allegations against Neotel.

It’s possible that the Neotel report was tabled on Friday, and that this then prompted emergency discussions between the parties and necessitated the delay in the Competition Tribunal hearings.

Vodacom is controlled by the UK’s Vodafone, which is subject to stringent UK anti-corruption legislation. A review may have been prompted, at least in part, by concern from Vodafone about the bribery allegations. If this is what has happened, there’s a chance the deal could fall through entirely.

The second possibility is around valuation. Has there been a material change in Neotel’s financial performance that has warranted a review? Has it taken its eye off the ball in the past two years during the courtship with Vodacom, or more recently with the suspension of Joshi and Whiley?

It’s also worth noting that the value of the rand against the dollar has plummeted since Tata Communications first agreed to the sale. The Economic Times of India pointed out on Monday that, in dollar terms, the value of the transaction has fallen from US$676m to $498m, or by more than 25%, due to the depreciation of the rand. In effect, the offer price from Vodacom has been reduced substantially in hard currency terms. Could Tata Communications be wanting a sweetener?

A top-rated analyst I spoke to doesn’t think valuation is the issue, though. And even it is was, it surely wouldn’t have required the suspension of the tribunal’s hearings.

A third possibility is that the parties are considering changing the structure of the deal to satisfy the tribunal that it won’t lead to a lessening of competition in South Africa’s telecoms industry. It’s this fear that has prompted a backlash from competitors, especially Cell C, which has been the most vocal in its criticism of the deal and the restrictions that the Competition Commission has proposed be imposed on Vodacom.

Under the commission’s conditions, Vodacom would be prohibited, among other things, from using Neotel’s spectrum for two years. But rivals like Cell C contend that this is laughable, given that Vodacom would be able to use the next 24 months to plan the deployment of a national 4G/LTE mobile broadband network using the spectrum it will acquire.

Cell C and others point out, correctly, that government has for years failed to get its act together on providing the framework for the licensing of additional spectrum to mobile operators and that there’s every chance that in two years’ time they still will not have access, while Vodacom will be able to use the Neotel spectrum to edge them out of the market.

Could the renewed discussions between Vodacom and Neotel be about working out how to placate the tribunal and the companies’ competitors about access to the spectrum? It’s difficult to see what they might suggest in this regard, beyond perhaps proposing that Vodacom not use Neotel’s spectrum for a further period of time. Certainly, Vodacom won’t acquire Neotel without its spectrum — Joosub has already made that very clear in a number of media interviews.

Also, if the talks are about spectrum, it seems unlikely that they’d exclude the competition authorities from the discussions. This third possibility seems, at face value, to be the least likely reason for the renewed dialogue. — (c) 2015 NewsCentral Media