Cell C will oppose Vodacom Neotel deal

·19 May 2014

Cell C says it will oppose Vodacom’s proposed acquisition of Neotel upon submission to the Competition Commission.

Vodacom and Neotel announced on Monday, 19 May 2014, that the two companies had entered into a deal that would see Vodacom acquire 100% of Neotel.

For R7 billion, Vodacom would acquire all of the issued share capital in, and shareholder loans against Neotel.

However, the CEO of Cell C, Jose Dos Santos, has said that it will oppose the acquisition.

“We oppose any deal that is likely to lessen competition in the market and it is our view that entrenching the dominance of an already dominant player will not be in the interest of the industry, the consumer, or the wider South African economy,” Dos Santos said.

This follows an earlier announcement by Vodacom that Cell C’s complaint to the Competition Commission had passed initial screening and will be further investigated.

Cell C filed the complaint in October 2013.

So far Cell C is the only industry player to openly oppose the deal, with the Internet Service Providers’ Association of South Africa (Ispa) and Internet Solutions adopting a “wait and see” approach.

Ispa said that its initial view is that there is currently no clear answer as to whether the proposed merger will benefit or hinder competition in the sector to the benefit or detriment of consumers.

“Once more information is available and members have been consulted Ispa will take a decision on whether to oppose or support the deal, or to offer qualified support based on the imposition of conditions designed to protect its members from potential anti-competitive consequences of the deal,” Ispa said.

Internet Solutions said that it will review the details of the proposed deal once a submission has been made to either the Independent Communications Authority of South Africa (Icasa) or the Competition Commission.

Telkom did not comment by the time of publication, while MTN declined to comment.

“We do not comment on specific competitor transactions but we look favourably to the continuous development of the telecoms landscape in South Africa which is essential for the long term sustainability of the industry,” the CEO of MTN SA, Zunaid Bulbulia, said in a statement responding to questions about the deal.