Cell C to oppose Vodacom, Neotel deal

7 Jan 2015

South African wireless operator Cell C has warned that Vodacom’s planned acquisition of second national operator (SNO) Neotel could have devastating effects on the local telecoms market, Bloomberg reports. The cellco is allegedly planning to tell regulators at a hearing next week that the deal should not be approved ‘because of the detrimental, indeed fatal, impact that this could have on competition in the electronic communications market’. Cell C also questioned the transfer of spectrum between the two companies by claiming that Vodacom’s competitiveness would be ‘unfairly’ strengthened if it acquired Neotel’s wireless spectrum.

As previously reported by CommsUpdate, in May 2014 Vodacom agreed to acquire the smaller operator from its majority-owner Tata Communications of India for ZAR7 billion (USD676 million); the deal is currently open for public comments as part of the Competition Commission (CompCom) approval process. Neotel has 15,000km of fibre-optic cable, including 8,000km of metro fibre in Johannesburg, Cape Town and Durban and is authorised to use 2×12MHz in the 1800MHz band and 2×28MHz in the 3.5GHz band. If Vodacom’s takeover of Neotel is approved, it will also gain access to 2×5MHz in the 800MHz band, as the SNO is the sole operator authorised to use spectrum in the ‘digital dividend’ band for telecoms services.

TeleGeography notes that in November 2014 rival operator MTN also lodged an objection with telecoms regulator ICASA and the CompCom regarding Vodacom’s acquisition of Neotel. The alleged bone of contention was the transfer of Neotel’s spectrum assets to Vodacom; MTN was reportedly seeking to have the frequencies handed back to ICASA for reassignment. Ahmad Farroukh, chief executive officer of MTN SA, confirmed the development by saying: ‘We have to do what is right’.