The Independent Communications Authority of SA (ICASA) has conditionally approved Vodacom's R7 billion purchase of SA's second national operator, Neotel.
The approval comes a year after Vodacom and Neotel initially asked the regulator for permission for the deal. However, ICASA's approval is subject to conditions which the regulator has yet to disclose. These conditions are expected to be revealed on Wednesday at a press conference.
Vodacom's purchase of Neotel, was officially announced last May. A year ago on Wednesday, the parties submitted applications to the authority for transfer of licences, and subsequently - a month later - asked the competition authorities for permission to merge. The competition authorities are still mulling Vodacom's offer.
Neotel says it is "encouraged" by the conditional approval, noting it will study the draft conditions - which will be published for public comment - before making additional statements. Vodacom could not immediatey be reached for input.
Vodacom, SA's second largest operator, wants to buy Neotel to help it fast-track its fibre offerings. The acquisition will also give it access to much-needed spectrum at the lower end of the frequency range, allowing it to roll out long-term evolution (LTE) faster.
Neotel has licences in three lucrative spectrum bands: 800MHz (used for broadcasting analogue TV), 1 800MHz (which it is using for its LTE pilot), and 3.5GHz (which is being used for WiMax services). Vodacom is refarming the 1 800MHz spectrum it has to offer limited LTE services.
Vodacom's bid has met with opposition, with companies opposed to it, such as MTN, arguing it will give Vodacom a free spectrum gift, allowing it a head start in rolling out faster broadband. All of SA's operators have been pushing for additional access to spectrum so they can roll out high-speed broadband.
In addition to competition concerns, some players, such as the Internet Service Providers' Association, have argued ICASA does not have the power to address the deal because its regulations do not cater for a transfer of control of spectrum and service licences.
Vodacom CEO Shameel Joosub has said the merged company will increase competition in the market. He noted it will essentially become the second national operator and, without the deal, SA will battle to meet its targets of ubiquitous broadband by 2020 and conditions should not be imposed.
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