The battle-fraught acquisition of Verizon by MTN has passed all the legal and regulatory processes and the Internet company is now a part of MTN Business.
MTN's announcement this morning follows the Competition Tribunal's unconditional approval of the deal last week, despite protests from competing buyer Allied Technologies (Altech).
As a Verizon customer, ITWeb learned that the company will be moving staff from the Verizon hosting centre in Woodmead and closing it down. It is understood that they will be transferred to the data centre at the MTN campus.
It is yet unclear whether any staff will be let go, or whether the company will bring all the staff into MTN Business. However, MTN SA MD Tim Lowry noted at the initial deal announcement that MTN would try to accommodate all the staff, even if they need to be integrated into other fields within MTN.
“Staff from Verizon Business will significantly bolster the skills pool of MTN in the voice and data convergence space, an area greatly affected by the existing skills shortage in SA,” he says.
Customers have been assured that the integration will not affect service. “MTN will now be able to offer existing clients the opportunity to holistically expand and upgrade their existing voice and data infrastructures,” explains Lowry.
Battles won
The mobile giant first confirmed its decision to acquire 100% of Verizon Business in June last year, with a speculated offer of R1.4 billion.
The deal entrenches MTN Business in five basic markets, including networking, which involves both IP networks and multi-protocol layer switching; hosting services, or managed services; wholesale Internet connectivity; voice over IP provision; as well as the possibility to provide end-to-end leased lines.
Altech contested the deal on the basis of the possibility that MTN would bundle its mobile products with its new data offerings. Altech was also concerned that MTN would give preferential treatment to Verizon.
However, days before the Competition Tribunal hearings, Altech withdrew its objections saying it had received signed assurance from MTN that no special treatment would be given to Verizon. Altech's battle has been heated and tribunal has noted its disapproval of Altech's actions during the competition review process.
Answer to Vodacom
Through the deal, MTN gains instant access to a vast set of corporate customers it did not have access to in the past. Irnest Kaplan, head of Kaplan Equity Analysts, says the deal essentially marks MTN's answer to Vodacom's data division, Vodacom Business.
Vodacom and MTN have been extremely successful in the mobile voice industry, however, the South African voice market is fast becoming saturated. “With mobile voice growth slowing, both companies needed to diversify.”
Vodacom built Vodacom Business organically. While it did buy Gateway Communications, and does own iBurst, neither has a strong foothold in the South African corporate market. “MTN's acquisition of Verizon gives them that, as well as the staff to back it up.”
Kaplan adds that in terms of a South African only market, the deal places MTN at least in the top four service providers. “What the deal does is put competitive pressure on both the large and smaller players in the market.”
Telkom and Internet Solutions hold the top spots in the market, while Verizon played in the next level beside them. Vodacom Business, while not playing as high as Telkom and IS, also made a significant mark in industry. Vox Telecoms and a few other player in the data space will feel the competition from the MTN, Verizon merger, explains Kaplan.
While there is competitive pressure, Kaplan notes that it is unlikely to lead to any significant price change in the enterprise data market.
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