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Tribunal postpones Vodacom-Neotel merger hearing

Paula Gilbert
By Paula Gilbert, ITWeb telecoms editor.
Johannesburg, 23 Nov 2015
Intervening parties, including rival telcos, are requesting Neotel and Vodacom pay their costs after a Competition Tribunal merger hearing was postponed.
Intervening parties, including rival telcos, are requesting Neotel and Vodacom pay their costs after a Competition Tribunal merger hearing was postponed.

The Competition Tribunal has postponed a merger hearing over the pending Vodacom-Neotel deal "indefinitely". This follows a request from the merging parties, which this morning announced they are looking to revise the structure of the R7 billion deal that has been on the cards for 18 months.

"Vodacom and Neotel have until 7 December to inform the tribunal and intervening parties, which include Telkom, MTN, Cell C and Dimension Data, whether the transaction will be cancelled or continue in an amended form," according to a tribunal statement.

"A pre-hearing will then be heard on 10 December to determine how to proceed."

Vodacom this morning informed the market it was in discussions with Neotel and its shareholders to "explore a revised transaction structure" for the proposed R7 billion buyout of 100% of Neotel.

Vodacom requested a delay in the tribunal proceedings, due to begin today, citing the outcome of the discussions with Neotel would "directly impact the extent of the approval being sought from the Competition Tribunal and the scope of the Competition Tribunal hearing".

The tribunal says if it is decided the merger will continue in an amended form, then new negotiations will be required to decide whether the hearing can continue as part of the present process.

"The merging parties did not want to give further information about the negotiations because of their commercially sensitive nature," says the tribunal.

Today's hearing was set to be the final hurdle in the multibillion-rand deal that 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.

The tribunal agreed over the weekend to delay the start of the scheduled hearing after a request from the merging parties, and instead held a pre-hearing today to give the merging parties and intervening parties an opportunity to discuss the application.

Following the indefinite postponement, the intervening parties have requested that Neotel and Vodacom pay their costs in the matter. Vodacom and Neotel, however, argue that interveners are not entitled to costs.

"The tribunal, at the pre-hearing on 10 December, will set up a process for deciding any disputes of costs that may be arise."

The Competition Commission recommended in June that the Competition Tribunal approve Vodacom's acquisition of Neotel, but with conditions. The Independent Communications Authority of South Africa (ICASA) has also given its blessing for the merger to go ahead, but is opposing the Competition Commission's conditions for the merger.

The recommended conditions include that Vodacom not directly or indirectly use Neotel's spectrum for a period of two years and that Vodacom invests R10 billion in fixed network, data and connectivity infrastructure. Vodacom will also be required to ensure that, within a period of two years, the value of capital held by black economic empowerment shareholders increase by R1.4 billion and that Vodacom not retrench any employees as part of the merger.

Vodacom's rivals Cell C, Telkom and MTN have also all launched separate court applications to try review or set aside ICASA's decision to approve the deal. The parties argued their cases in the North Gauteng High Court earlier this month and are still awaiting a decision.

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