The Independent Communications Authority of SA (ICASA) is out of the mix concerning Telkom's proposed R2.67 billion buyout of Business Connexion (BCX) and the deal looks set to move smoothly to completion.
Telkom says, while it has agreed to remain in contact with the regulator as the acquisition progresses, the determining body in the proposed deal between BCX and Telkom is the Competition Commission, and then the Competition Tribunal.
This was discussed in a meeting between ICASA and Telkom last month, which took place after the telco and the IT outsourcing company withdrew their 2014 application to ICASA for a transfer of licences from BCX to Telkom.
Telkom communications head Jacqui O'Sullivan explains Telkom and BCX see no reason for a transfer of licences "at this time" and the parties are awaiting feedback from the Competition Commission. She says the withdrawal has not delayed the process.
Meanwhile, another deal on the table and possibly one of the biggest mobile mergers in SA's history - Vodacom's proposed acquisition of 100% of Neotel for R7 billion - may require more waiting time. This, after the authority last week issued invitations for a second round of submissions from interested parties, due this Thursday.
Both Vodacom and Telkom previously expressed confidence in their respective deals being done and dusted by the end of March.
Dodging complications
An industry source with knowledge of the processes, who asked not to be named, says he suspects Telkom decided to "take the simple road" after seeing the complications surrounding Vodacom's would-be Neotel purchase - including a debate around high-demand spectrum.
"[Telkom] looked at what was happening with the Vodacom and Neotel case and said, fortunately, they don't need BCX's licences right now, and so [the telco] changed the deal so that it is not buying the licence. Otherwise it would be far more complicated and drawn out. This way, ICASA has no part in the matter."
Shortly after hearings around Vodacom's proposed acquisition in January, Dominic Cull, owner of Ellipsis Regulatory Solutions, said ICASA did not have the procedures in place to deal with what was 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."
In January, before Telkom withdrew its licence transferral application, the company argued ICASA had no power to deal with the Vodacom/Neotel matter because the regulations it required did not exist. It said Vodacom was using this fact as a backdoor to gain more spectrum.
Moving along
Yesterday, the Common Market for Eastern and Southern Africa (Comesa) said Telkom's R2.7 billion buyout could proceed.
The deal has also already been approved by the Competition Authority of Botswana, and seen unconditional approvals from the Namibian Competition Commission and Tanzania Fair Competition Commission.
In a statement to shareholders at the end of January, BCX said "the parties" (Telkom and BCX) were awaiting regulatory approvals from the Competition Commission of SA, Comesa and ICASA.
With two of these out of the way, the deal could well be concluded this month, says Cull. "My understanding is that there is no great opposition at the commission."
BCX said in its shareholder update that, upon receipt of the required approvals, final approval would be sought from the Takeover Regulations Panel and the Johannesburg Stock Exchange.
In Vodacom and Neotel's case, says Cull, only after supplementary submissions have been reviewed will ICASA figure out how to proceed. "If [the regulator] acquiesces to what Vodacom and Neotel are asking, it will probably end up in court as part of a review process."
ICASA councillor Katharina Pillay has indicated the authority will respond to ITWeb's queries around the respective deals by close of business tomorrow.
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