SA's telecoms industry is on tenterhooks as it awaits a regulatory call - expected to be revealed by the end of March - on what could be one of the biggest mobile mergers in SA's history.
Over the next two months the Independent Communications Authority of SA (ICASA) will deliberate on the landscape-changing proposed bid for a buyout of Neotel by mobile giant Vodacom, and the decision it ultimately takes will set an industry precedent.
This is according to industry experts and comes after the regulator on Friday wrapped up public hearings into Vodacom's application to buy 100% of Neotel for R7 billion. At conclusion, ICASA councillor Katharina Pillay said the authority expected to have made its decision on a way forward during March.
The Competition Commission - the other half of the decision-making equation - said on Friday that it was still considering the matter. Once it has deliberated, the Tribunal will have the final say on whether the deal goes ahead.
Long wait
Dominic Cull, owner of Ellipsis Regulatory Solutions, says, on ICASA's side alone, there are a number of directions in which the matter could veer from here - and it looks like there could be a long wait ahead, considering the challenges last week's hearings highlighted.
Typically, he says, ICASA processes take around nine months from start to finish - "but this one is a little more complex and there are some legal challenges in terms of the process [ICASA] will follow".
Cull says it may well be that ICASA goes on to consider the submissions (made by seven interested parties, including mobile rivals MTN, Telkom and Cell C) and makes a decision within about two to three months. Alternatively, Vodacom and Neotel may withdraw their application and resubmit it under different circumstances.
On Friday, Cull noted ICASA does not have the procedures in place to deal with what is effectively a transfer of spectrum ownership. When it comes to Vodacom's current buyout application, there is law that outlines the procedure for a transfer of ownership - but not for a transfer of control.
"If the deal goes ahead, ICASA will have to practise its discretion. The problem for Vodacom and Neotel is that this will be open for MTN or someone to challenge the decision in the High Court."
He says it might be better for Vodacom and Neotel to suggest to ICASA that they will help expedite getting a legal process for transfer of control in place. "ICASA would then publish an amendment to the regulations, put it out for comment and then finalise it. That in itself would be a whole new process."
Whichever way it goes, Vodacom's earlier hopes of the deal being done and dusted by the end of March are almost certainly dashed.
Precedential parallel
Meanwhile, Telkom - which accused ICASA of not having the power to decide the Vodacom matter last week - filed its own application with ICASA in August last year, for transfer of control of the service and spectrum licences held within Business Connexion (BCX) to Telkom. This comes after it bid R2.7 billion to buy BCX to boost its IT capabilities.
Initial news of Telkom's move followed in the same week as Vodacom announced it had reached an agreement with Neotel regarding the purchase price, moving a step closer to the next phase of a deal that had been in the making since September 2013.
Telkom last week noted, if ICASA green-lighted the Vodacom deal, the decision would be open to a High Court challenge. Vodacom, in turn, said the lack of defined procedures did not mean the regulator could not act - or that it left the matter open to review.
Cull says Telkom's application was submitted in roughly the same format as that of the Vodacom-Neotel transaction, so many of the same legal arguments will apply before ICASA.
"Obviously Telkom and BCG [Business Connexion Group] will be watching the outcome of the Neotel/Vodacom application very closely to see how ICASA proceeds as this will set the model for how their application is handled."
The closing date for written submissions on the Telkom-BCG application was 31 December. The industry is now waiting for ICASA to provide clarity around public hearings into the application.
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