Cell C has welcomed the high court’s judgement that says Vodacom cannot acquire Neotel’s licences, but still wants the merger halted.
“It is hard to paint a rosy picture of telecommunications in South Africa,” says Cell C CEO Jose dos Santos. “The environment is dominated by two players and policed by a regulator that does not always meet its mandate. In the end all that grief is passed on to South African mobile and internet users, who carry the brunt of some of the highest telecommunications costs in the world.”
He believes the solution is an open and competitive market, made possible by a level playing field. “This is why several industry players chose to oppose the planned merger between Vodacom and Neotel. In 2014 Vodacom, South Africa’s largest mobile operator, announced plans to buy Neotel, the country’s second-largest fixed-line operator.
“If Vodacom were to acquire Neotel’s vast fibre networks as well as its mobile spectrum, it would render the company’s iron grip on the market into an unassailable monopoly able to dictate the price consumers pay to connect.”
He explains that spectrum is a key concern, and is essential for delivering faster internet to a growing user base. “Already this is a pinching nerve for mobile operators, as spectrum is not only scarce but licenses for it are very difficult to acquire. Vodacom’s takeover of Neotel would have delivered substantial amounts of this valuable commodity to the former, translating into an incredible and unfair advantage that could only hurt the market and ultimately consumers. Even the Competition Commission noted this, advising a number of conditions that included Vodacom be barred from using Neotel’s spectrum for more than two years.
“Yet even though Vodacom decided to modify its deal and exclude spectrum licenses, the High Court’s decision to set aside approval of the merger is a clear victory for South Africa’s broadband market and the consumers it serves. But perhaps even more key is the finding that the industry regulator ICASA (Independent Communications Authority of SA) did not act appropriately. Its behaviour, incredibly, included private meetings with Vodacom. The High Court Judge said that ‘[f]or an administrator to attend a private meeting with one of the parties under these circumstances is, in my view, not only improper, but also unlawful’.”
Dos Santos adds that Cell C continues to oppose the merger. “Any merger between Vodacom and Neotel should be opposed. It would make it even harder for newcomers to compete in and grow South Africa’s Internet market.
“As the need to connect more South Africans to the Internet and the demand for affordable broadband services continue to grow, every measure should be taken to ensure a responsible and fair market – one that ultimately provides better services for less to all South Africans,” he adds. “This is not simply a matter of market share, but an issue that concerns all of us.”