Vodacom purchase of Neotel inches closer

Posted by LA Thornton on Tuesday, July 7, 2015
On 30 June 2015, the Competition Commission released a media statement announcing that it has recommended to the Competition Tribunal, the approval of the merger of Neotel and Vodacom.  The recommendation included certain conditions.

1)  Vodacom may not use Neotel’s spectrum until 31 December 2017.  Hopefully, the Tribunal will tie the time period to the implementation of equitable spectrum policy by ICASA.

2)  Vodacom must commit to R10 billion investment in infrastructure within 5 years.  The wording set out in the media release leaves a lot of room for interpretation.  Hopefully, the Tribunal decision will be more precise.

3)  Vodacom has 2 years to ensure its BEE shareholding is not below the current BEE shareholding of Neotel. 

4)  Vodacom may not retrench any of Neotel’s employees as a result of the merger.  There is no mention of Vodacom employees.

In the same week, on 2 July 2015, ICASA published a notice that it has approved the application subject to conditions not yet determined.  ICASA requested comment on the following two conditions.

1)  A period within which Vodacom must comply with the statutory BEE requirement of 30% BEE shareholding.  It is not clear that ICASA has the authority to condone non-compliance with the relevant provisions of the EC Act, even for a short period of time.

2)  25% of the rollout of broadband by Neotel must be undertaken in underserviced areas.

ICASA also indicated that it will, in due course, consider an inquiry into spectrum use.  It is certainly not clear that this will be concluded by the deadline contemplated by the Competition Commission of 31 December 2017.

Comment on the ICASA proposed conditions are due 22 July 2015.

Tags: licensing  "ownership and control" 
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