Hearing into Vodacom-Neotel merger delayed

Johannesburg - The Competition Tribunal of South Africa agreed on the weekend to postpone a hearing into the proposed R7bn Vodacom-Neotel merger.

This comes after Vodacom [JSE:VOD] and Neotel brought an application for a postponement of the hearing that was scheduled to start on Monday.

Reasons for the postponement were not disclosed by the Competition Tribunal. However, Fin24 understands that the delay has inconvenienced parties opposed to the merger as witnesses have been transported to Gauteng where the hearing is planned to happen in Pretoria.

Instead, the Competition Tribunal will hold a private pre-hearing on Monday to discuss the application, the “issue of wasted costs” and when the hearing can reconvene, said the Competition Tribunal in a statement.

The Competition Tribunal hearing is expected to be among the last hurdles facing the Vodacom-Neotel merger after the Competition Commission and the Independent Communications Authority of South Africa (Icasa) approved the merger earlier this year.

However, telecommunications competitors are expected to oppose the proposed R7bn merger deal at the Competition Tribunal hearing amid arguments that the acquisition of Neotel’s spectrum would give Vodacom an unfair advantage. Vodacom is currently South Africa’s biggest mobile network with around 30 million subscribers.

Intervening parties to attend the hearing include Telkom, Cell C, MTN, Icasa and economic development and telecommunications ministers.

Icasa, in particular, is expected to oppose the Competition Commission’s conditions for the merger.

In June, the Competition Commission approved the deal on condition that Vodacom not use Neotel’s spectrum to offer wholesale or retail mobile services for two years.

The Competition Commission also requested that black economic empowerment shareholders must increase their stake in Vodacom by R1.4bn within two years, that Vodacom not retrench any employees amid the merger and that Vodacom invest R10bn in fixed network, data and connectivity infrastructure.

UPDATE - Vodacom explains delay

Vodacom, in a market update to shareholders on Monday morning, said the reason for the postponed meeting centres on discussions regarding a revised transaction structure. Although, the company didn't go into further detail.

"Shareholders are advised that Vodacom South Africa is in discussions with Neotel and the shareholders of Neotel to explore a revised transaction structure," said Vodacom.

"The outcome of these discussions will directly impact the extent of the approval being sought from the Competition Tribunal and the scope of the Competition Tribunal hearing. Accordingly, Vodacom South Africa and Neotel have requested that the hearing be postponed. The details applicable to the postponement are to be determined at Competition Tribunal hearing in Pretoria today. Shareholders will be advised accordingly of the outcome," said the company.

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