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Cape Town - Cell C plans to tell regulators at a hearing next week that its business is threatened by Vodacom’s [JSE:VOD] proposed acquisition of Neotel.
Vodacom is already South Africa’s largest mobile-service provider and its R7bn deal to buy the internet provider shouldn’t be approved “because of the detrimental, indeed fatal, impact that this could have on competition in the electronic communications market,” Cell C said in a statement to the Independent Communications Authority of South Africa (Icasa).
MTN [JSE:MTN] said in November that the transaction should be blocked on competition grounds as it would allow Vodacom to start a high- speed 4G mobile network before other operators.
Telkom [JSE:TKG] said in the same month that Neotel’s wireless spectrum should be reallocated to other operators to prevent the deal causing a “distortion of the competitive landscape”.
'Super-dominant operator'
By acquiring Neotel’s customers, fibre lines and wireless capacity, Vodacom would become “a super-dominant operator,” hurting competition and making it uneconomic for new entrants to join the market, Cell C said in an October 15 statement to regulator Icasa that was seen by Bloomberg News.
The document was verified by a company representative, who said it reflects Cell C’s current position.
Vodacom’s competitiveness would be “unfairly” strengthened by control of Neotel’s wireless spectrum, so any such capacity not used by Neotel should be reallocated to other companies, said Cell C, which calculated its share of the mobile market at about 11% by revenue and Vodacom’s at more than 50%.
Vodacom had domestic service revenue of R48.3bn in the year ending March 31, 2014.
Vodacom would probably force Cell C and other competitors to stop leasing capacity on Neotel’s fibre network after the acquisition, Cell C said.
Icasa will hold a hearing on the deal on January 15 and 16 in Johannesburg. Vodacom, which is 65% owned by UK’s Vodafone, agreed to buy Neotel from India’s Tata Communications in May to expand its network of high-speed fibre-optic cable for businesses and homes.
Vodacom’s shares gained 1% to R124.72 as of 9:05 in Johannesburg, valuing the company at R184bn.
