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MTN still keen on network sharing deal

 

By Gugu Lourie

MTN South Africa is still keen on finding a better way of efficient network consolidation and sharing after the proposed deal with Telkom, Africa’s largest fixed line telephone group, was scuppered by the country’s competition body.


The Competition Commission on Monday informed Telkom and MTN South Africa that it has recommended the approval of the proposed transaction between the two companies to the Competition Tribunal to be blocked.

Telkom and MTN South Africa signed a heads of agreement in 2014 to extend their existing roaming agreement to include bilateral roaming and outsourcing of the operation of Telkom’s radio access network.

But MTN is still keen on finding other ways to go-ahead with this sort of transaction.

Bridget Bhengu, MTN South Africa’s spokesperson, said: “MTN continues to explore other ways of efficient network consolidation and sharing as is happening in other parts of the world. MTN also has multiple firm network expansion, efficiency, wholesale and sharing strategies in place which are underpinned by an aggressive network rollout of all technology streams including fibre and LTE.”

Telkom Phone Booth
Telkom Phone Booth

In a statement, Bhengu added:  “The proposed Telkom deal was just one element of the larger MTN strategy, which entailed the radio access network and fibre strategies. We are pursuing other RAN efficiency gains and exploring other network sharing transactions.”

The transaction between MTN and Telkom would have constituted the first RAN infrastructure sharing arrangement in South Africa between two mobile network operators and was aimed at meeting the demand in the unprecedented global shift from traditional voice to data.

“MTN believes that the transaction would have encouraged competition in the market and between the parties, fostered an efficient utilisation of the networks of both parties and would have been to the benefit of the sector and the country by catering to the exponential data growth, said Bhengu in a statement.

“It is regrettable that the matter is not moving forward to the Competition Tribunal as the final decision making authority, as MTN firmly believes, the transaction would have enabled competition in the market and between the parties and that MTN would have been able to clearly demonstrate this before the Competition Tribunal.

“The transaction would have resulted in an efficient utilisation of the networks of both parties and would have been to the benefit of the sector and the country as a whole in terms of the rapidly growing demand for data.”

The competition commission found that the merger would effectively limit the ability of Telkom Mobile to grow and independently compete against MTN and other mobile operators.

“This is particularly so in the mobile data markets where future competition is likely to take place. This outcome of this merger transaction is likely to entrench a duopolistic market structure dominated by Vodacom and MTN. Such a resultant duopoly market structure is unlikely to serve customers well, particularly when considering that it is the smaller mobile operators that lower prices before the larger operators, MTN and Vodacom,” said the commission.

Telkom CEO,Sipho Maseko, on Modnday, said: “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,” Telkom Group CEO, Sipho Maseko said.

 

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