Telkom and Business Connexion given nod

THE Competition Tribunal has approved Telkom’s R2.6bn takeover of Business Connexion but with conditions.

Telkom intends the acquisition to advance its convergence strategy and help it grow its enterprise operations to offset falling fixed-voice revenue.

The acquisition was a crucial component of Telkom’s turnaround strategy as it sought to offer information and communications technology (ICT) services to corporate clients, CEO Sipho Maseko said.

The conditions include a price freeze on affected products by Telkom, and the inclusion of the copper network offering to the affected products.

There are also conditions on employment — the companies are allowed to cut only 60 jobs over three years.

Telkom’s proposed 2007 tieup with Business Connexion was blocked by the competition authorities following strong objections from the industry.

Business Connexion CEO Isaac Mophatlane said the merger would enable Telkom to expand its existing offerings while providing scale in IT services. Mr Mophatlane has said previously that working with Telkom would improve Business Connexion’s “customer value proposition through a greater ability to provide integrated ICT solutions”.

Business Connexion employs more than 6,700 people across its operations in Africa, the UK and Dubai, and generates annual revenue in excess of R6bn.

The Competition Commission had said the merged entity would have the ability to engage in bundling strategies that might result in anticompetitive effects, and recommended that the deal be approved with conditions.

The deal is still waiting for final approval from the Independent Communications Authority of SA, the Takeover Regulations Panel and the JSE.