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South Africa regulator approves Vodacom bid for Neotel
2015-07-01 10:09:00| Telecompaper Headlines
(Telecompaper) South Africa's Competition Commission has recommended to the Competition Tribunal that Vodacom's intended purchase of Neotel be approved on condition that the mobile company does not cut Neotel jobs and invests ZAR 10 billion in the company within five years. The ZAR 7 billion deal was approved by South Africa's communications regulator, Icasa, earlier in June. The commission said Vodacom shall not directly or indirectly use Neotel's spectrum for the purpose of offering wholesale or retail mobile services to any of its customers for a period of two years from the approval date or 31 December 2017, whichever is earlier. The Commission found that the proposed transaction is likely to substantially lessen or prevent competition in the mobile services market. Vodacom is the market leader in mobile services markets and the additional spectrum from Neotel will result in spectrum concentration effects that will likely consolidate Vodacom's dominant position. According to the competition commission, the acquisition will confer first mover advantages to Vodacom in network speed, capacity and mobile offerings. Vodacom will not be constrained by other competitors as they are unlikely to match its offering. These factors, the commission said, taken together will likely lead to reduced choice and higher prices to end customers in the absence of effective constraints on Vodacom. The acquisition will now go before the competition tribunal for a final decision. Competitors including MTN, Africa's biggest wireless operator, and Cell C have previously said they oppose the purchase because they say Vodacom would become too dominant.
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Category:Telecommunications