The Competition Commission approves of the Vodacom/Neotel merger

Earlier this month, the Competition Commission approved Vodacom’s decision to acquire Neotel for R 7 billion. The result :Neotel will be a wholly-owned subsidiary of, and under the control of Vodacom.

The Commission found that the merger is likely to substantially lessen or prevent competition in the mobile services market as Vodacom already holds the dominant position in the market with roughly 30 million subscribers. The merger will benefit Vodacom, the Commission has found, as competitors are unlikely to match Vodacom’s network speed, capacity and mobile offerings.

The Commission has as a result recommended to the Competition Tribunal that the merger be approved. This approval, as expected, is subject to conditions, some of which are that Vodacom will not use the Neotel spectrum for wholesale or retail mobile services to any of its customers for two years, and that Vodacom will not retrench any of the Neotel employees as a result of the merger. As for transformation, within 24 months of the approval date, Vodacom must ensure that its share capital held by Black Economic Empowerment (BEE) shareholders will increase by R1.4 billion.

Read the Competition Commission’s media release on http://www.compcom.co.za/wp-content/uploads/2015/01/Commission-recommends-approval-of-Vodacom-Neotel-merger-with-conditions.pdf