Vodacom Neotel deal back in the spotlight

Public hearings are set to commence later this week to discuss Vodacom’s acquisition of Neotel, more than 15 months after both parties announced that they were in discussions.

This is according to Vodacom CEO Shameel Joosub, who says that the final decision will have far-reaching consequences with the potential to either accelerate or inhibit the roll-out of high-speed fibre connectivity and next-generation mobile services in South Africa.

The hearings will be hosted by telecommunications regulator Icasa who will have to take into account, objections by competitors, Cell C and MTN.

In May last year, Vodacom announced it had reached an agreement to purchase 100% of Neotel for an enterprise value of R7 billion.

“On the face of it, that sounds a lot like a big company buying out a smaller competitor, which can’t be good for competition or the consumer. Right? Well, no,” Joosub said in an opinion article published in Business Day.

“Combining these two companies enables Vodacom to focus on getting fibre connections to more homes and businesses.

“The end result will be an acceleration of the roll-out of fibre-to-the-home (FTTH) and fibre-to-the-business (FTTB) solutions,” Joosub said.

This, the chief executive noted, is what Government has highlighted as one of its key objectives for national broadband in South Africa.

“Furthermore, the combined entity would also be able to supply enhanced business services which would provide a strong contender to the incumbent, Telkom,” he said.

This transaction, according to Joosub, would be good for competition, good for businesses, good for the consumer and crucially, would support Government in its goal to get South Africa connected with high-speed broadband.

“So why are there objections to the deal,” Joosub questioned.

He said that some of the objections raised thus far highlight that by acquiring Neotel, Vodacom will be able to roll out next generation mobile services faster than would otherwise be possible.

“It was even conceded in a competitor’s submission to the regulator that due to this transaction consumers will benefit from the earlier and cheaper availability of LTE/4G in SA,” Joosub said.

Once approved, Joosub said that Vodacom can get on with investing meaningfully in Neotel.

“We don’t think that it’s an exaggeration to say that this transaction is crucial to the future competitiveness of the nation,” he said.

More on Vodacom and Neotel

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Cell C will oppose Vodacom Neotel deal

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Vodacom Neotel deal back in the spotlight