The regulatory aspects around SA's largest mobile operator Vodacom's bid for SA's second network operator Neotel were in motion today as the Independent Communications Authority of SA's (ICASA's) hearings into the deal got under way.
For the next two days, Neotel and Vodacom on the one side - and the seven "interested parties" that answered ICASA's invitation for written submission around the deal on the other - will argue for and against a 100% acquisition of Neotel in a R7 billion deal.
Should ICASA approve the deal, and should it obtain the Competition Tribunal's nod, Vodacom will become Neotel's controlling shareholder. This means the mobile operator will ultimately control key strategic decisions around investment, technology and vendors, among others.
MTN, Cell C, the Internet Service Providers' Association, the Wireless Access Providers' Association, Internet Solutions and Crystal Web are all expected to present their cases against the deal going through.
This comes after the deal was confirmed and put before the regulator last year. Although rumours had been swirling for some time prior to being confirmed a year ago, Vodacom only officially announced in May that it wanted to acquire 100% of Neotel for R7 billion. ICASA opened up the deal for comments in September.
Ovum analyst Richard Hurst has said the addition of Neotel's fixed-line infrastructure and customer base will be a good boost for Vodacom. "The infrastructure will be able to support the anticipated increased mobile data traffic backhaul as well as being able to deliver more advanced services to the existing Vodacom enterprise as well as consumer customers."
In terms of the competitive environment, Hurst says the deal will allow Vodacom to become an even more dominant player. "However, the acquisition is unlikely to change the current pricing structures and regime for both business and consumers."
He points out this deal should also be viewed in the context of the Telkom-Business Connexion (BCX) deal announced in May last year. "If the Vodacom deal does go through then we can expect the Telkom BCX deal to follow suit.
"One should bear in mind that the market environment has shifted and the Telkom BCX deal must be regarded in this shifting market scenario."
Vodacom expects to close the deal before the end of March.
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