Vodacom gives up on Neotel

Paula Gilbert
By Paula Gilbert, ITWeb telecoms editor.
Johannesburg, 01 Mar 2016
CEO Shameel Joosub says it is disappointing to reach this conclusion despite all of Vodacom's efforts.
CEO Shameel Joosub says it is disappointing to reach this conclusion despite all of Vodacom's efforts.

Vodacom has announced its long-awaited acquisition of Neotel has been called off.

"The proposed acquisition of the majority of Neotel's assets related to its fixed-line business has lapsed due to regulatory complexities and certain conditions not being fulfilled," Vodacom said in a statement a short while ago.

The telecoms giant says the two parties have agreed the proposed restructured transaction, announced in December, "can no longer be progressed".

"It is disappointing that we have reached this conclusion despite all our efforts to find a way to deal with the complexities of the restructured transaction," says Shameel Joosub, group CEO of Vodacom.

The original R7 billion buyout of Neotel by Vodacom has been on the cards since May 2014, but came up against strong opposition from rival telco operators and other industry players, mostly because of the potential competitive consequences of the transfer of Neotel's much sought-after radio frequency spectrum.

The Competition Commission had already recommended the Competition Tribunal approve the acquisition but with conditions - including that Vodacom not directly or indirectly use Neotel's spectrum for a period of two years. The Competition Tribunal, however, never had the chance to decide on the matter after the merger hearing was postponed in November 2015 after Vodacom and Neotel said they were looking to revise the structure of the deal.

Last week, Cell C, MTN, Telkom and Internet Solutions won a a high court challenge against the Independent Communications Authority of SA for its original decision to approve the transfer of spectrum and operating licences from Neotel to Vodacom.

This came after Vodacom had already decided to take the spectrum off the table in a "modified transaction" announced last December. The new deal would have seen Vodacom acquire Neotel's assets related to its fixed-line business, customer base and staff of the company. The spectrum was to be offered by Neotel to all network operators through roaming arrangements.

"Our ambition to increase the rollout of fibre-based broadband services to customers remains. We will continue to look for spectrum opportunities, as well as opportunities to accelerate our fixed-line business," concludes Joosub.