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Roaming proposed to seal Vodacom-Neotel deal

Johannesburg - Almost 20 months after Vodacom launched a bid to buy Neotel for R7bn, the deal is set to head back to the Competition Commission with a mooted roaming agreement.

In May 2014, Vodacom announced its bid to buy Neotel to expand its fixed line footprint and bolt on more spectrum to offer faster mobile broadband services.

The deal was then approved by the Competition Commission and the Independent Communications Authority of South Africa (Icasa) in June this year.

On Thursday, the Competition Tribunal had a pre-hearing on the Vodacom-Neotel deal. This followed an announcement by Vodacom on Tuesday that it planned to restructure the transaction to only buy Neotel’s fixed line infrastructure and not its spectrum licences.

And after this week’s tribunal pre-hearing, the deal is set to head back to the Competition Commission amid the addition of a roaming agreement proposal.

“As part of the modified transaction, Neotel would also offer a roaming arrangement to all mobile network operators (MNOs), including Vodacom,” said Vodacom in a statement.

“The outcome of the pre-hearing today (Thursday) was that Neotel will make a roaming offer to all MNOs. Once the roaming offer has been made and the MNOs have responded, Vodacom and Neotel will re-notify the details of the restructured transaction with the Competition Commission, and it was agreed that the matter will be dealt with expeditiously," said the company.  

Vodacom’s statement further said that it, along with Neotel, are doing “all that is necessary to conclude the restructured transaction in the shortest possible time”.

To date, the planned merger has had to deal with regulators taking long periods of time to provide feedback and a scandal at Neotel regarding regarding bribery allegations surrounding a Transnet deal.

In May this year, Vodacom’s group chief executive officer Shameel Joosub told journalists in an earnings call that it was “taking too long” for the Competition Commission and Icasa to provide feedback on the deal - at that stage the deal had been on regulators’ tables for a year.

Then, after regulators approved the deal in June this year, turmoil beset Neotel in July as its chief executive officer and chief financial officer were placed on special leave. This development came amid an alleged scandal in which Neotel stood accused of paying letterbox company Homix R91m to help secure a telecoms contract with Transnet.

CFO Steven Whiley and CEO Sunil Joshi then each respectively quit in November and December this year after Neotel board investigations cleared them of alleged bribery.

Despite these issues, both companies still look intent on sealing the deal with Vodacom explaining the possible next step.

“The tribunal also agreed to hold a pre-hearing with all the parties within five days of the re-notification to the Competition Commission,” said Vodacom.

What is your view on these developments? Do you think the Vodacom-Neotel deal should be allowed to go ahead? Tell us by clicking here.

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