Neotel this morning hit back at parties that are against its R7 billion buyout by SA's largest cellular operator, Vodacom, arguing it has followed all the proper processes outlined in the law.
One of the biggest arguments against the deal - put forward by interested parties - is that Neotel would be effectively transferring its communications licences to Vodacom if the deal goes ahead. Vodacom wants to buy Neotel to gain access to much-needed spectrum and enhance its fibre footprint.
However, argued Neotel counsel Paul Kennedy - the deal does not amount to a transfer of Neotel's licences. Kennedy, speaking on behalf of both Neotel and Vodacom during public hearings over the deal at the Independent Communications Authority of SA (ICASA) this morning, said the acquisition neither amounted to a de facto, nor a de jure transfer of Neotel's licences.
Kennedy noted there was "no hidden agenda" in Vodacom's bid for Neotel, and that its offer had been misinterpreted as a transfer of licences.
Vodacom and Neotel previously pointed out that neither the licences nor spectrum are being transferred, as Neotel will continue to own these because it will continue to exist as an entity in the Vodacom stable, and the only thing that is being transferred is control of Neotel.
"It's all about a change of control at Neotel as Vodacom will be the controlling shareholder." Key decisions, such as investments and technology choices, will be controlled by Vodacom through its board, noted Kennedy.
Kennedy added the parties have gone through the correct channels and put all the necessary paperwork in place, as required by law.
Misinterpretation
In November, MTN objected to the deal, arguing it would result in a transfer of spectrum to Vodacom, a situation it has reportedly said is not allowed in SA. As such, MTN has argued, Neotel's spectrum should rather be returned to ICASA and be reallocated.
Vodacom's bid for all of Neotel is intended to boost its fibre network, as SA's second national operator has 15 000km of fibre, which will be a catalyst for Vodacom's plans to roll out fibre-to-the-business and fibre-to-the-home. However, ITWeb understands Vodacom is also very keen to get its hands on Neotel's spectrum in the 800MHz, 1.8GHz, and 3.5GHz ranges.
Kennedy today refuted that the deal constitutes a takeover of spectrum, saying Neotel will still hold its individual electronic communications network service (ECNS) licences, and electronic communications service (ECS) licences, as well as its radio frequency spectrum licences. "Vodacom will continue to hold its individual ECNS and ECS licences and radio frequency spectrum licences."
Any argument that Vodacom is taking over licences is "without basis, legally and factually," Kennedy told the ICASA panel. He noted the deal was about transferring control of Neotel's licences to Vodacom, and not a transfer of licences.
Legal position
Under the amended Electronics Communications Act, which came into effect on 21 May 2014, written permission from ICASA is needed to transfer control of service licences, as well as spectrum. Telecoms lawyer Lisa Thornton has said, before the law was amended, only the transfer of a licence required prior approval, and not transfer of control. This applies to both service licences and spectrum licences.
Kennedy argued the law supports the parties' position, as it clearly makes a distinction between licence transfers and changes of control.
"Any major transaction always involves complex arrangements but ultimately what is clear is this: all the transaction involves is a purchase of share capital by Vodacom from Neotel's current shareholders of the entire shareholding and what follows is a change in control," said Kennedy this morning.
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