Vodacom and Telkom will need written approval from the Independent Communications Authority of SA to take over licences from their takeover targets, thanks to a change in the law.
This is the view of a telecoms analyst, and a lawyer, in the wake of the recent changes to the Electronic Communications Act, which was amended in April, meaning the two consolidation deals on the table will be the first to be weighed up against the law.
Vodacom had been in talks around buying Neotel for several months when it announced in May it would pay R7 billion in a bid to boost its fibre network and use its radio frequency more effectively. Telkom's R2.67 billion purchase of Business Connexion (BCX) - also announced in May - will require moving licences.
Written approval
Independent telecoms analyst Samantha Perry says the licensing moves for both entities require prior written approval from ICASA because the amended law says: "An individual licence may not be let, sub-let, assigned, ceded or in any way transferred, and the control of an individual licence may not be assigned, ceded or in any way transferred, to any other person without the prior written permission of the authority."
BCX deputy CEO Vanessa Olver, however, notes no licences are technically being transferred as ownership of the whole listed company will be transferred. She does not see the new law as "problematic".
Vodacom spokesman Richard Boorman says the company is busy sorting out regulatory approvals and has made submissions to ICASA, as well as the Competition Commission. However, a source close to the deal suggests Vodacom would likely need approval from ICASA to use the spectrum.
Telecoms lawyer Lisa Thornton concurs that prior approval to transfer a licence, or control over it, is needed, adding before the law was changed, only the transfer of a licence required prior approval, and not the transfer of control.
Perry notes, however, "licensing transfer isn't a given", adding that interested parties will be able to object, which could lead to a refusal by ICASA to transfer the licences. Thornton adds ICASA cannot transfer licences if the party has fallen foul of the Act, has unpaid licence fees, or the new owner's historically disadvantaged ownership is less than 30%.
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