Mega cellphone deal flies into flak
Vodacom’s proposed R7 billion acquisition of Neotel is facing more headwinds.
Vodacom’s proposed R7 billion acquisition of Neotel is facing more headwinds, even before the case gets heard by the Competition Tribunal in late November.
Cell C and MTN have filed papers at the High Court seeking the setting aside of communications regulator Icasa’s decision on June 11 to approve the deal.
‘Unlawful’ procedure
The two operators’ legal manoeuvres come three months after Telkom filed papers at court arguing that the procedures Icasa used to approve the Neotel acquisition were “unlawful”. Telkom, too, wants the decision set aside.
In Cell C’s founding affidavit, chief legal officer Graham Mackinnon argues Icasa’s approval of the Vodacom/Neotel transaction contains no conditions.
He says: “The approval was not, in its express terms at least, given subject to any conditions.”
But it is Icasa’s “failure” to determine the impact consolidation of spectrum under Vodacom’s control would have on competition before approving the deal that lies “at the heart of Cell C’s review application”, Mackinnon says. He says the proposed change of control of Neotel’s spectrum licences — approved by Icasa — will change the competitive landscape dramatically.
“It provides Vodacom with control [directly or indirectly] 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,” he says.
“Critically, Vodacom will control twice the amount of 1 800MHz 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 adds.
All operators are keen for access to 800MHz for more, cheaper and widespread mobile broadband coverage.
Vodacom will, says Mackinnon, be able to “attract sufficient subscriber revenues away from other operators to prevent them from reinvesting significant profits into such improvements”. The latest developments come against the backdrop of an apparent battle over powers and jurisdiction between Icasa and the Competition Commission.
News reports say Icasa is dissatisfied with the terms and conditions the commission wants imposed on Vodacom and Neotel for the deal to go ahead.
Icasa has reportedly asked the commission for access to confidential documents to allow it to intervene, raising fears sensitive information submitted by industry players to the commission could end up in the hands of rivals. – NewsCentral Media This article was first published on TechCentral