MTN urges Icasa to block deal

MTN appealed to the country’s regulators to block the proposed acquisition by competitor Vodacom of internet provider Neotel, saying the tieup would damage competition.

Vodacom, which leads MTN with the most cellphone customers in South Africa, will gain access to Neotel’s spectrum as part of the R7 billion deal. That would allow the company to start a high-speed 4G network before other operators and bolster its already dominant position.

The “advantage could well be measured in years, rather than months”, MTN said in a submission to the Independent Communications Authority of SA (Icasa).

“The network, market and cost advantage available to Vodacom would then become unassailable.”

Vodacom, which is 65 percent-owned by Newbury, England-based Vodafone Group, agreed to buy Neotel from India’s Tata Communications in May to expand its network of high-speed fibre-optic cable for businesses and homes.

SA’s internet service is at an early stage of development, with broadband speeds lagging.

The phone company plans to invest more than R1bn a year in the cable network.

South Africa’s internet service is at an early stage of development, with broadband speeds lagging many smaller economies. Vodacom competes in that market with Telkom, the landline monopoly that is 40 percent owned by the government, closely held Cell C and MTN.

Neotel’s spectrum should be returned to communications regulator Icasa in the event of a change of company ownership, MTN said. The network could then be reassigned.

Vodacom planned to complete the Neotel deal before April, chief executive Shameel Joosub said in an analyst presentation earlier last week. Spokesman Richard Boorman declined to comment.

“A favourable conclusion of this transaction is good for South Africa and will increase competition and broaden customer choice,” Neotel corporate services officer Tracy Cohen said.

MTN shares gained 0.06 percent to R228.67 at the close on JSE on Friday. – Bloomberg