Vodacom-Neotel merger hearing ‘postponed indefinitely’

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Vodacom. (Duncan Alfreds, Fin24)
Vodacom. (Duncan Alfreds, Fin24)

Johannesburg - The Competition Tribunal of South Africa has agreed to indefinitely postpone a hearing regarding a R7bn merger between Vodacom [JSE:VOD] and Neotel.

This comes after Vodacom released a market update earlier on Monday, saying the company is exploring a “revised transaction structure” regarding the Neotel deal.

Vodacom in its statement said the revised transaction discussions “will directly impact the extent of the approval being sought from the Competition Tribunal and the scope of the Competition Tribunal hearing”.

The Competition Tribunal then on Monday morning announced a delay in the meeting, which was expected to hear challenges from intervening parties such as Telkom [JSE:TKG], Cell C and MTN [JSE:MTN]. The Independent Communications Authority of South Africa and economic development and telecommunications ministers were also set to attend.

But now the hearing is off.

“Vodacom and Neotel have until December 7 to inform the tribunal and intervening parties, which include Telkom, MTN, Cell C and Dimension Data, whether the transaction will be cancelled or be continued in an amended form. A pre-hearing will then be heard on December 10 to determine how to proceed,” said the Competition Tribunal in a statement.

“If it is decided the merger will continue in an amended form, then new negotiations will be required to decide whether the hearing can continue as part of the present process. The merging parties did not want to give further information about the negotiations because of their commercially sensitive nature,” said the tribunal.

Vodacom, at the time of writing, had not responded to Fin24's request for comment.

The move by Vodacom to push for a revised transaction structure comes after Neotel placed its chief executive officer Sunil Joshi and chief financial officer Steven Whiley on special leave in July amid an investigation into bribery.

At the time, The Mail & Guardian reported that Neotel stands accused of making illicit payments of R91m in fees to a ‘letterbox company’ company called ‘Homix’ to win a R1.8bn telecoms services contract from transport parastatal Transnet.

Vodacom is majority owned by the UK’s Vodafone, which is listed on the London Stock Exchange (LSE). The LSE has strict requirements, with the likes of its Bribery Act which seeks to tackle bribery regardless of whether it took place in the UK.

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