The Competition Tribunal has approved MTN's acquisition of a 50% and one share stake in Internet service provider (ISP) Afrihost, after the Competition Commission last week recommended the deal be given the green light.
MTN announced in June it was buying the majority stake, for an undisclosed amount, to add scale to its local online ICT service offering, which is focused on the consumer and small and medium enterprise (SME) market.
In making its recommendation to the tribunal, the commission noted MTN is an integrated telecommunication service provider active across various levels of the value chain, and provides mobile telephony solutions to its customers in the wholesale and retail markets, while Afrihost is an ISP, operating primarily at the retail level.
"The transaction presents horizontal overlaps in the activities of MTN and Afrihost in relation to the provision of hosting, ADSL and mobile data services at a retail level. Afrihost also resells MTN's ADSL and mobile data services, thus the merger also presents a vertical overlap," it says.
However, its assessment of the deal found MTN and Afrihost do not appear to be direct competitors because Afrihost focuses on the SME and residential segment while MTN mainly focuses on the large corporates.
The commission noted there are several alternative entities that can provide hosting services, such as Internet Solutions, which is bidding to buy MWeb Business through parent company Dimension Data; Business Connexion Group, which is in the process of being bought out by Telkom; Gijima and Vox.
In addition, in the ADSL and mobile Internet market, Afrihost is a relatively small player and competes with MWeb Connect, Vox, Telkom Mobile and Vodacom, among others, it added.
"In relation to the large corporates, since Afrihost does not provide services to these customers, MTN is already in a position to engage in such conduct before the merger."
As a result, the commission believes the proposed deal is unlikely to lead to a "substantial prevention and lessening of competition in the hosting, ADSL and mobile data markets".
This is one of the moves towards consolidation in the ICT sector, after Vodacom bid R7 billion for Neotel, and Telkom offered R2.67 billion for Business Connexion.
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