MTN believes the Independent Communications Authority of SA's (ICASA's) decision to approve Vodacom's R7 billion buyout of Neotel was "irrational and unreasonable".
MTN has confirmed to ITWeb that it launched a High Court application last month to try hold up the deal that has been almost 18 months in the making.
Fellow telecoms operators Cell C and Telkom already have separate court bids under way, with all of Vodacom's rivals agreeing the deal would give SA's biggest telco even more competitive advantage.
MTN is seeking "the review and correction or setting aside" of the decision by ICASA to approve the proposed acquisition by Vodacom of the entire issued share capital of Neotel, according to Graham De Vries, MTN SA corporate services executive.
He says, in its application, MTN raises "a number of legitimate complaints". Among these are the allegation that the deal "would irreparably harm competition in the mobile market, and therefore the interests of consumers".
"ICASA was obliged, as a matter of law, to consider whether the Neotel/Vodacom application would promote competition but ICASA failed to do so since it misconstrued the scope of its powers," says De Vries.
"MTN contends the acquisition by Vodacom of control over Neotel's mobile spectrum would entrench Vodacom's already dominant position in the mobile telecommunications market by conferring on it an advantage that could not be replicated by any of Vodacom's competitors."
MTN believes ICASA made "a material error of law", as well as failed to comply with the mandatory provisions of the empowering legislation and did not have regard to relevant considerations when it decided to approve the Vodacom-Neotel application.
"MTN's position is that ICASA's decision was irrational and unreasonable," according to De Vries.
Fierce objection
The R7 billion buyout of Neotel by Vodacom has been on the cards since May 2014 but has met with intense opposition from rival telco operators, which see the deal causing an un-competitive ripple effect, especially in terms of spectrum allocation.
When the Competition Commission gave its recommendation that the Competition Tribunal approve the deal, it was with certain conditions, including that Vodacom not be allowed to use Neotel's much sought-after spectrum for a period of two years.
At the time, the Competition Commission said the two-year deferment period was intended to give an opportunity to policy-makers to address the spectrum challenges in the industry. However, rivals do not think the condition does enough to mitigate Vodacom's domination of the market.
Because of this, MTN is also looking to set aside or correct ICASA's decision to give permission for the transfer of control of Neotel's radio frequency spectrum licences in the 850MHz, 1 800MHz and 3.5GHz bands to Vodacom.
Cell C, Telkom and Dimension Data have also launched separate proceedings against ICASA on the matter, and De Vries says: "All of the parties will be heard together by the court in Pretoria on 10, 11 and 12 November."
ICASA spokesperson Paseka Maleka says the regulator is "aware of the court papers and heads of arguments being lodged" by MTN. He says the matter is being opposed by ICASA but was not aware that any date had been set for the matter to be heard.
Cell C's case
"Cell C has launched its own application to review ICASA's decision. Cell C's own application does support Telkom's and MTN's applications," according to Cell C chief legal officer, Graham Mackinnon.
ICASA set out its conditions to approve the merger in July, including the fulfilment of a 30% black economic empowerment obligation. The regulator also said it was "considering the imposition of the condition" that at least 25% of any broadband rollout to be undertaken by Neotel following the merge would have to be in under-serviced areas.
Cell C's founding affidavit, which ITWeb has seen, picks apart both of these conditions, as well as outlines a number of issues with the transfer of any spectrum licences between Neotel and Vodacom.
"The appropriate allotment of spectrum is in fact a matter of national importance, given that it must be allocated and assigned in the public interest. Unequal allocations can result in distortions in the market and competitive advantages or benefits being distributed unfairly among licensees, who need spectrum to provide their services," Cell C says in the document.
Cell C believes the transfer of Neotel's spectrum to Vodacom would "have severe negative implications for competition in the South African telecommunications market". It says the merger will give Vodacom a number of competitive advantages when it is already "a leading and very likely dominant player" in the market and has the "largest number of subscribers and earns the most revenues".
Cell C says the proposed change of control of Neotel's spectrum licences to Vodacom radically changes the spectrum landscape in the country, one that it already sees as unevenly weighted against Cell C.
Cell C's court application states ICASA's approval of spectrum licence changes would give Vodacom a spectrum advantage over its direct competitors in the 90MHz band as well as allow Vodacom control of twice the amount of 1 800MHz band spectrum as the rest of the market.
The deal is still awaiting the approval of the Competition Tribunal, which is set to hold merger hearings next month, before ruling on a decision.
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