South Africa: ICASA hears complaints about telecom merger

Two different government regulators are listening to concerns about the hotly contested $606 million merger proposal of two of South Africa’s telecommunications companies. Vodacom is seeking to buy out Neotel and create the largest mobile phone company in South Africa. Due to regulations concerning telecommunication frequencies, the Independent Communications Authority of South Africa (ICASA) and Competition Commission (CC) are both investigating the implications of the proposed merger. ICASA was hearing complaints last week from telecommunication rivals CellC, MTN and Telkom. CellC has been the most outspoken claiming that the merger will form a company that has the potential to kill its competition.

MTN took the more moderate stance of saying that if the merger is approved, there should be restrictions. Currently, telecommunication frequencies are not tradeable in South Africa and as the merger stands, Vodacom would gain control of Neotel’s frequencies. MTN requests that for the merger to be approved, all of Neotel controlled frequencies should be reverted to ICASA which would then reassign the frequencies on an equitable basis.

Vodacom is claiming that it will use the merger to expand into fiber optic broadband, which if the company moves into a new market there is a higher likelihood of the merger being approved since it would provide more competition for Telkom dominated fixed line broadband market.

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