Parties opposed to Vodacom's R7 billion buyout of Neotel argue the Independent Communications Authority of SA (ICASA) must block the deal because it will reduce black holding in SA's second national operator.
Last Thursday and Friday, several interested parties presented their views on the deal, with many arguing Vodacom's bid for Neotel cannot be allowed to proceed. This is because ICASA may not transfer spectrum licences if this will lead to a drop in empowerment ownership.
Neotel is currently 19% empowered, with that stake held by Nexus Communications, while Vodacom only has 9.22% black ownership. Should ICASA allow Vodacom to buy all of Neotel, this will result in a drop in its empowerment levels, argued Webber Wentzel partner Peter Grealy, addressing the panel on behalf of Internet Solutions.
Grealy noted neither Vodacom nor Neotel had indicated what steps they would take to improve black ownership levels. He argued, in terms of the law, ICASA can refuse to transfer or grant a licence if black ownership is under 30%.
Although Grealy conceded the application sought a transfer of control, and not a change of licence ownership, ICASA must apply the 30% threshold if it is to uphold its mandate of bolstering empowerment.
Not true
However, Neotel hit back at these claims, arguing there is no legal requirement for it to be 30% empowered. Moreover, notes Neotel, those against the deal have also argued its black ownership will drop below 30% if the bid goes through.
This, says Neotel, is not the case, because it has never been as much as 30% empowered, a position that is consistent with its licences. In addition, says Neotel, ICASA's mandate in terms of the law will be achieved because black people will not lose out as a consequence of the deal.
Instead, Neotel's ownership score will actually increase, as the net value black people own in it will move up, and it will score higher for voting rights and economic interest.
Neotel also notes the deal will enable its current empowerment shareholders to realise their investment, which is good for empowerment. However, if ICASA blocks the deal, Neotel's black shareholders "would be locked into this one investment forever".
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