19 Aug 2015

COMPETITION IN THE MOBILE MARKET UNDER SCRUTINY

by Jennifer Finnigan, Partner, Durban,

Yesterday the Competition Commission recommended the prohibition of a proposed transaction between MTN and Telkom.  The transaction involves an acquisition by MTN of Telkom’s radio access network (RAN) assets.  MTN’s acquisition of these assets together with a network managed services agreement and reciprocal roaming agreements would, in essence, give MTN unlimited access to Telkom’s mobile data capacity but at the same time limit Telkom’s access to it.  The Commission found that the transaction is likely to boost MTN’s service offering (in terms of network speed, capacity and mobile offerings) so much that smaller mobile service providers like Cell C and Telkom Mobile will not be able to compete with it.  This, the Commission believes, will entrench a market dominated by Vodacom and MTN and not serve customers well in the long run.  The Commission, MTN and Telkom have not been able to agree on appropriate remedies to address these concerns and on which to approve the transaction conditionally.  The merger parties have indicated that they do not intend to pursue the matter.  Considering the protracted history of Walmart’s acquisition of Massmart that decision is not surprising.