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Lobby group contests Vodacom-Rain pact, as telco denies merger

Read time 3min 30sec

Lobby group the Progressive Blacks in ICT (PBICT) has joined Telkom in demanding that spectrum arrangements between Vodacom and Rain be declared a merger in terms of the Competition Act.

Telkom announced yesterday that it had approached the Competition Tribunal with its demands, saying multiple agreements between Vodacom and Rain grants SA’s largest mobile operator the use and control over the deployment of Rain’s spectrum, including the planning, rollout, maintenance and service of its radio access network.

Telkom wants competition authorities to make a call that the arrangements constitute a notifiable merger and should be subjected to scrutiny by the competition authorities.

Vodacom denies its cooperation with data-only network Rain is a union, saying the deal was sanctioned by authorities.

However, the details of the spectrum arrangements between Vodacom and Rain have not been made public.

Telkom’s group executive for regulatory affairs and government relations, Dr Siyabonga Mahlangu, believes Vodacom’s ability to control Rain’s spectrum entrenches its position as a dominant player in a highly concentrated market.

“It is important that the effects of spectrum arrangements on competition are scrutinised,” says Mahlangu. “Particularly in light of the upcoming spectrum auction which will set the ground for the nature of competition in the mobile market for the foreseeable future.”

Spectrum doesn’t come cheap

The squabble comes on the back of a recent move by regulator, the Independent Communications Authority of South Africa (ICASA), to set the ball rolling for the spectrum auction.

The regulator has since set reserve prices per spectrum band as high as a billion rand.

The cheapest is the 3 500MHz lot, with a reserve price per lot of R9.8 million, and the highest lot is 800MHz, with a reserve price of R1.1 billion per lot.

This development is a breakthrough for the telecoms sector, which has, for years, been battling with ICASA over the allocation of these licences.

Mobile network operators Vodacom, MTN, Telkom and Cell C have been readying themselves to take advantage of the spectrum to strengthen and develop new services, such as 5G.

Joining the fight

Now, the PBICT says it will be making submissions to the Competition Tribunal, buttressing Telkom’s case.

“We also call on our people to start using their power to choose a telco partner that cares about the people of this country over one that cares for its people and foreign shareholders,” says PBICT president Leon Rolls.

“This Vodacom and Rain deal cannot be allowed. Vodacom must bid for the spectrum and buy 30% from the WOAN [wholesale open access network]. Stop hacking the codes and systems aimed at transforming our people.”

However, a Vodacom spokesperson tells ITWeb that both the Competition Commission and ICASA investigated the agreements between Vodacom and Rain in 2018.

“The Competition Commission found that the 2018 agreements do not constitute a merger in terms of the Competition Act. ICASA found that the 2018 agreements are not in breach of the Electronic Communications Act,” says the spokesperson.

“Furthermore, in its discussion document on the market inquiry into mobile broadband services in South Africa, ICASA stated that the arrangement has facilitated the expansion of Rain as a wholesale and retail competitor in mobile broadband, which ICASA deemed to be pro-competitive.”

Vodacom says it remains confident that “the agreements between Vodacom and Rain do not constitute a notifiable merger and do not contravene the Competition Act”.

The telco says as the matter is currently subject to legal proceedings before the Competition Tribunal, it will not provide further comment.

Earlier this morning, former FNB CEO Michael Jordaan, an early investor in Rain, tweeted: “It is not clear whether Telkom is playing a political game around spectrum, or whether it is taking aim at Rain, which is starting to gain market share in the fixed-LTE and 5G market.”

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