Cell C, MTN want high court help to block Vodacom-Neotel deal - Mobile World Live

Cell C, MTN want high court help to block Vodacom-Neotel deal

05 OCT 2015

South African operators Cell C and MTN asked the country’s high court to set aside the approval given by telecoms regulator ICASA in June to Vodacom acquiring local ISP Neotel for ZAR7 billion ($576 million), according to TechCentral.

The move comes before the case is to be heard by the country’s Competition Tribunal in November.

Earlier, fixed incumbent Telkom had also asked for the decision to be set aside, saying that the procedure used by ICASA was “unlawful”.

Following ICASA’s decision in July, South Africa’s Competition Commission also approved the deal, with the condition that Vodacom does not cut any jobs, commits to a ZAR10 billion investment in the company within five years and does not get access to Neotel spectrum for at least two years.

However, Cell C argued ICASA’s approval “was not, in its express terms at least, given subject to any conditions” and that the authority did not understand what impact the consolidation of spectrum would have on competition.

Chief legal officer at Cell C, Graham Mackinnon, argued that the decision gives Vodacom control “of an additional 90MHz of spectrum formerly assigned to Neotel. It will thus hold a 90MHz spectrum advantage over MTN and Cell C, its direct competitors”.

“Critically, Vodacom will control twice the amount of 1.8 GHz band spectrum as the rest of the market and, uniquely, would get access to spectrum in the 800MHz band, which it did not have before,” he said.

800MHz is coveted as it means operators can provide more widespread mobile broadband coverage at lower costs.

He also said Vodacom will be able to “attract sufficient subscriber revenues away from other operators to prevent them from reinvesting significant profits into such improvements,” adding that operators would become less effective competitors and not capable of constraining Vodacom, “even to the limited extent that they are able to now.”

“Consumers will be the ultimate losers as Vodacom will have no incentive to lower its prices and rivals will be forced to raise theirs to meet their increased costs,” he said.

ICASA and the Competition Commission are themselves involved in a battle over powers and jurisdiction.

The Competition Commission investigates cases, including Neotel,  and then refers them to the Competition Tribunal for adjudication.

Business Day reported that Icasa is unhappy with the conditions the commission wants to impose for the deal to get the green light.

Back in May, Cell C CEO, Jose Dos Santos, said the operator will do everything possible to ensure the deal does not go through.

“We will keep them in court for as long as the legal system allows it, which is two years,” he had told journalists.

 

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Saleha Riaz

Saleha joined Mobile World Live in October 2014 as a reporter and works across all e-newsletters - creating content, writing blogs and reports as well as conducting feature interviews...More

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