Vodacom and Neotel merger to be revised

Vodacom and Neotel merger to be revised

The $500 million merger between South Africa’s Vodacom and Tata’s Neotel is allegedly being revised following a request for postponement from both companies over the weekend.

Vodacom received approval from the Independent Communications Authority of South Africa (ICASA) for its Neotel acquisition in June 2015, but the Competition Commission has now proposed a set of conditions that may undermine the value of the transaction for Vodacom, Reuters reports.

Neotel owns a large amount of radio frequency spectrum and if a deal is approved, it would enable Vodacom to roll-out a high-speed 4G network in the country.

However, the Competition Commission has advised the Competition Tribunal that the deal should only be approved on the condition that Vodacom waits two years before using Neotel spectrum.

Further conditions from the Competition Commission propose that Vodacom invest $713 million in a fixed-line network over the next five years.

Vodacom and Neotel’s owners Tata Communications are now in discussions over a revised deal.

“The outcome of these discussions will directly impact the extent of the (regulatory) approval being sought,” Vodacom said in a statement.

A number of operators in South Africa –including Cell C and MTN Group – have opposed the deal between Vodacom and Neotel on grounds that it will threaten local market competition.


Gift this article