The Competition Tribunal has prohibited Telkom’s proposed acquisition of Business Connexion, ending months of uncertainty.
“We are pleased that the uncertainty surrounding the outcome of the Competition Tribunal hearings has now been resolved and we can focus on consolidating Business Connexion’s leading position in the South African ICT industry,” says Benjamin Mophatlane, CEO-designate of Business Connexion.
“With or without Telkom, Business Connexion is a solid business which has excellent prospects. We invite our shareholders, clients and employees to come along for the ride – there are exciting times ahead.”
Mophatlane says there will be a renewed focus on building Business Connexion Communications and looks forward to taking advantage of the opportunities provided by convergence and deregulation.
“Our service delivery culture remains our prime focus; we have shown tremendous resilience in a highly competitive environment and will continue to do so,” he adds.
Reports indicate that Business Connexion will seek an alternative partner, probably international.
Telkom is expected to also continue on its acquisition trail, possible also looking abroad for a partner.
The Internet Service Providers' Association (ISPA) has welcomed the decision.
"This decision marks a victory for both ISPA's members and for consumers," says Greg Massel, ISPA's co-chair. "As both the supplier of key services to ISPs and a direct competitor in the Internet market, Telkom has exploited its dominant position for more than a decade.
"Anti-competitive practices such as margin squeezing and vertical bundling have resulted in high prices for consumers and made it extremely difficult for independent ISPs to compete fairly," he adds.
Together with players like Dimension Data, ISPA was a key opponent of the BCX deal, raising concerns with the Tribunal that the acquisition would further entrench Telkom's position in the market, allowing it to engage in vertical integration through BCX and provide attractively "bundled" services by using revenues gained from basic services to cross-subsidise its offerings in competitive areas.
Massel adds: "ISPA has fought against anti-competitive activities in the Internet market since the Association's inception in 1996. The Competition Tribunal's decision gives us heart that the playing field in South Africa is finally beginning to level, and presents a clear message to Telkom that the authorities are committed to a fair and truly competitive communications sector."
Sounding a word of caution despite yesterday afternoon's decision, ISPA notes that Telkom remains a dominant player in the market, and continues to engage in a number of practices that ISPA believes to be anti- competitive. In particular, pricing of wholesale ADSL accounts and wholesale access to ADSL services remains an area of key concern for the Association.