Neotel deal to make life tougher for Telkom: Vodacom CEO

Vodacom CEO Shameel Joosub says that the group’s intention to acquire Neotel means that competitors will need to lift their game.

Public hearings kicked off on Thursday to discuss Vodacom’s acquisition of Neotel, more than 15 months after both parties announced that they were in discussions.

“Yes, the deal may make life tougher for our competitors – particularly Telkom – because they will need to raise their game to compete with the merged Vodacom-Neotel,” Joosub said in his opening remarks to regulator, Icasa.

“This should not be a concern for Icasa.  The deal will not distort competition. Icasa is here to protect consumers – not to protect competitors from competition.”

“It’s true that this transaction will create opportunities for Vodacom, but it will also create considerable opportunities for Neotel.  It will give Neotel access to financial resources to roll-out its business model more extensively,” Joosub said.

He noted that a deal would also give the Vodacom group the fixed assets and capabilities necessary to make it a credible player in the fixed space.

“Of course, the deal will also enable the spectrum assets of Neotel to be used to enhance mobile data services.  These developments are not only good for the customer and good for the country, but absolutely essential if Government’s broadband aspirations are to be met,” he said.

Without the deal, Vodacom said that Neotel will remain financially constrained and incapable of investing to the level required to create a substantial fibre network which is much needed.

“Vodacom’s ability to develop world-class mobile data services will also be constrained,” Joosub said.

After the deal, the CEO said that Vodacom together with Neotel will become a more powerful competitor in the fixed space.

“Vodacom will plan for a level of investment several times higher than Neotel’s current level of investment in fibre. We will accelerate investment in ‘fibre to the home’ and ‘fibre to the business’ to create a wider footprint and better services”

Customers will benefit, Joosub stressed, particularly those enterprise customers who currently have no realistic alternative to Telkom for their fixed services.

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Neotel deal to make life tougher for Telkom: Vodacom CEO