Johannesburg - MTN - SA’s second-largest mobile network - has expressed disappointment with the Competition Commission's Monday decision to block a tie-up between it and Telkom Mobile.
Telkom and MTN had been in talks for more than a year over a deal that would see them extend their bilateral roaming agreement and Telkom outsource its mobile infrastructure - the radio access network (RAN) - to MTN.
On Monday, the parties said they had called off talks in the current form after the Competition Commission recommended to the tribunal, its higher body, that the deal not be allowed to go ahead.
No reasons were initially provided for the competition authorities’ blocking, although Reuters reported the authorities found the proposed transaction would substantially prevent or lessen competition in mobile services market
The commission also found the merger would effectively limit the Telkom Mobile’s ability to grow and independently compete against MTN and other mobile operators, the wire service reported.
It added the commission could not see any workable remedies identified that would adequately address harm to competition arising from transaction.
As a result, said Telkom, it and MTN SA decided not to proceed with the transaction in its current form.
On Tuesday evening, MTN said the deal would have been the first RAN infrastructure sharing arrangement in SA between two mobile operators and was “aimed at meeting the demand in the unprecedented global shift from traditional voice to data’.
Telkom wanted the deal so it could cut back on capital expenditure for its mobile arm.
Boosting competition
MTN argues the transaction would have “encouraged competition in the market and between the parties, fostered an efficient utilisation of the networks of both parties and would have been to the benefit of the sector and the country by catering to the exponential data growth”.
SA’s second-largest operator says it is “regrettable” the deal will not head to the tribunal as the mobile company believes it would have been able to “clearly” show it would have boosted competition.
It adds it continues to explore other ways of efficient network consolidation and sharing as is happening in other parts of the world. “MTN also has multiple firm network expansion, efficiency, wholesale and sharing strategies in place which are underpinned by an aggressive network rollout of all technology streams including fibre and LTE. The proposed Telkom deal was just one element of the larger MTN strategy, which entailed the radio access network and fibre strategies.”
Telkom CEO Sipho Maseko has also indicated the company is disappointed with the decision.
Maseko added in a statement, "over the past 18 months, our focused efforts to de-risk our mobile business have delivered a mobile division that is viable and sustainable. The mobile business will break even in this financial year and we are most encouraged by the stability that has been brought into our mobile environment. As previously communicated we will continue to explore all avenues to further strengthen our mobile business."
Telkom Mobile, which launched as 8ta a few years ago, has 2.2 million active customers, making it the fourth largest mobile operator in SA.
In the year to March, Telkom Mobile grew its net revenue to R954 million, a 174.1% gain, and said mobile data revenue increased 50.6% to R988 million.
IOL