The body said the proposed merger will hurt competition in the local market
South Africa’s Competition Commission blocked a proposed radio access network sharing and bilateral roaming deal between mobile operators MTN and Telkom, with the regulatory body recommending the Competition Tribunal prohibit the deal between the two carriers.
According to the Competition Commission, the deal calls for MTN to take over financial and operational responsibility for the rollout and operation of Telkom’s radio access network. Through this deal, MTN would have access to additional spectrum capacity from Telkom to rollout an LTE network.
“Although the transaction does not involve the combination of MTN’s and Telkom’s mobile retail businesses, the commission found that the proposed transaction is likely to substantially prevent or lessen competition in the mobile services market,” the Competition Commission said in a statement.
The commission also said that the proposed merger is likely to entrench a duopolistic market structure dominated by telecom groups Vodacom and MTN and is likely to have a significant impact on the structure of the South African mobile markets and future competitive dynamics.
“This is also a negative effect, especially when considering that South Africa experiences higher mobile prices than other comparable countries in the world,” the statement reads. The Commission added that there were several objections to the merger received from third parties in the industry.
Both MTN and Telkom announced they will not proceed with the deal after the recommendations made by the Competition Commission.
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“While the commission’s decision is disappointing, Telkom and MTN have agreed not to proceed with the transaction, as we wish to avoid a protracted tribunal hearing,” said Telkom Group CEO Sipho Maseko.
The transaction was filed with the commission as a large merger on April 29, 2014.
There are four licensed mobile network operators in South Africa: Vodacom, MTN, Cell C and Telkom Mobile. According to figures from GSMA Intelligence, South Africa currently has approximately 80 million mobile subscribers. The mobile market is led by Vodacom, with 33.3 million customers, followed by MTN, with 28.5 million subscribers.
According to recent press reports, Telkom’s CEO Sipho Maseko had expressed interest in acquiring mobile operator Cell C.
Omantel secures additional spectrum to expand LTE services
In other EMEA news, Oman Telecommunications acquired additional spectrum in the 800 MHz and 2600 MHz bands for OMR7.7 million ($19.9 million), according to the telco’s latest financial report.
Omantel said it will use the new spectrum to boost its LTE network coverage across the Sultanate. Omantel launched LTE services in 2012 using spectrum in the 2300 MHz band. The company ended June with 3.4 million subscribers. In the mobile segment, the telco reached a market share of 58% by the end of the second quarter.