Cell C has slammed Vodacom's application to buy 100% of Neotel's shares for R7 billion in an attempt to convince the Independent Communications Authority of SA not to sanction the proposed deal.
Presenting on behalf of Cell C, Graham Mackinnon, Cell C's group general counsel, said the operator's objection revolved around the issues of competition, the requirements of law and regulations, and scarce resources.
Cell C has 11% revenue market share, while Vodacom has 52%, MTN 35% and Telkom Mobile just 2%. Telkom has 90% revenue market share in the fixed market. This scenario, said Mackinnon, represents an unlevel playing field as it is.
"The acquisition of all the shares in Neotel by Vodacom has several [negative] consequences for the market as a whole."
Cell C believes a green light for the deal would further skew the playing field, entrench Vodacom's dominance "opening possibilities for abuse of dominance, as already experienced by Cell C", and enable Vodacom and Neotel to bypass requirements in the Electronic Communications Act (ECA) regarding licences and the allocation of spectrum.
Mackinnon said Paul Kennedy's (legal counsel for Neotel, representing Vodacom as well) argument posed in his presentation earlier was fallacious and fraught with contradiction. "It was clear from [the question session at the end of the presentation] that the panel is grappling with inherent contradictions in the submission."
He accused the Neotel/Vodacom contingent of suffering from a "severe case" of cognitive dissonance, which he defined as "the ability to hold two contradicting ideas simultaneously and accept both as correct".
Two patent fallacies in the earlier argument, said Mackinnon, were that spectrum will provide Vodacom with a first-mover advantage and there is nothing wrong with this; and that better access to spectrum and fibre will benefit consumers.
"Consumers will lose out in the long run if Vodacom becomes super-dominant. [The company] is already dominant as it is. Only competition benefits consumers - and this deal will ultimately only benefit Vodacom."
Sly deal
Mackinnon further accused Vodacom of manipulatively structuring its application to circumvent the restrictions laid out in the ECA.
"Kennedy says this deal is about control and that both Vodacom and Neotel will carry on with their individual business as usual. It is a ridiculous notion that Vodacom could be a 100% controlling shareholder and Neotel would be left to its own devices.
"Counsel was tap-dancing around this contradiction and didn't succeed in beng convincing. It seems this transaction is about structuring a deal around achieving a certain goal - yet they say there is no hidden agenda."
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