The antitrust authority said on 30 June (2-page / 262 KB PDF) it also wants Vodacom, which would control Neotel after the merger and use it to roll out high-speed fibre and next-generation mobile services, to commit ZAR 10bn ($821m) in infrastructure spending within the next five years and guarantee a return for Neotel's black empowerment shareholders.
In addition, Vodacom would not be allowed to use Neotel's spectrum to sell wholesale or retail mobile services to any of its customers for a period of two years from the approval date or 31 December 2017, whichever is sooner.
The Commission said the conditions were necessary because the merger is “likely to have a significant impact on the structure of the South African mobile markets and future competitive dynamics”.
The two-year deferment period “is intended to give an opportunity to policymakers to address the spectrum challenges in the industry”, the Commission said.
“Vodacom is the market leader in mobile services markets and the additional spectrum from Neotel will result in spectrum concentration effects that will likely consolidate Vodacom’s dominant position,” the Commission said. “The acquisition will confer first mover advantages to Vodacom relating to network speed, capacity and mobile offerings. Vodacom will not be constrained by other competitors as they are unlikely to match its offering. These factors taken together will likely lead to reduced choice and higher prices to end customers in the absence of effective constraints on Vodacom.”
In a separate move announced on 1 July, South Africa’s National Treasury said it had sold its 13.91% stake in Vodacom to the Public Investment Corporation, acting on behalf of the Government Employees Pension Fund, to raise funds for a ZAR 23bn allocation to the state power utility Eskom.
A survey published last year by Swedish company Ericsson (8-page / 224 KB PDF) said sub-Saharan Africa is “rapidly closing in” on the global penetration rate of mobile communications usage. The survey said mobile financial services are increasingly popular as the use of information and communications technology (ICT) grows.
However, the survey said: “Mobile operators and relevant ICT stakeholders, including governments, must drive the development of appropriate infrastructure to handle the growing traffic demand on networks.”
According to a report released earlier this year, Africa's telecoms sector will undergo more mergers and acquisitions activity as markets continue to consolidate as they mature. African nations with four or more operators, or with telecoms companies that have a market share of less than 15%, are likely to see more consolidation, said the report by Moody’s Investors Service.
