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Shortly following the Competition Commission’s approval and a few weeks after the conditional green light by the Independent Communications Authority of South Africa (Icasa), the regulator on Friday called for comment as it finalised the conditions of the long awaited R7-billion deal that would see Vodacom absorb Neotel.
Last month’s approval of Neotel’s transfer of control application was subject to the finalisation and public consultation process on the fulfilment of black economic-empowerment (BEE) obligations and roll-out conditions.
All interested parties now had 14 days to submit written comments tabling views on a reasonable period that Icasa should allow for BEE requirements compliance – an obligation to have 30% historically disadvantaged individual ownership - and the reasonable target and timelines to be imposed for the fulfilment of the universal service and access roll-out condition.
“The authority recognises that it may not be practicable for applicants to comply with the BEE requirement from the onset. Therefore, the authority wishes to determine the reasonable period within which the applicants should be permitted to ensure compliance with the BEE requirement,” Icasa said in a statement on Friday.
Further, with the merger resulting in the consolidation of spectrum, Icasa aimed to leverage its “regulatory instruments” to facilitate universal service and access, with priority being given to rural and underserviced areas.
On Wednesday, the Competition Commission approved the deal with conditions, including the stipulation that Vodacom must, within two years, ensure that the value of shares in its share capital held by BEE shareholders increase by R1.4-billion – the current BEE shareholders’ direct shareholding in Neotel.
However, should Icasa’s imposed BEE obligations exceed R1.4-billion, the obligations tabled by the regulator would apply.
The commission also recommended that some “structural and public interest” conditions be imposed on the deal that would provide Vodacom first-mover advantages in network speed, capacity and mobile offerings.
To provide policy-makers with an opportunity to address the spectrum challenges in the industry, Vodacom would not, directly or indirectly, use Neotel’s spectrum for the purpose of offering wholesale or retail mobile services to any of its customers for two years from the approval date, or December 31, 2017, whichever was earlier.
Further, Vodacom would, in the five financial years following the merger approval date, invest R10-billion in fixed network, data and connectivity infrastructure, with 50% of the injection aimed at all fixed network elements required to enhance services to homes and enterprises in South Africa, including the development of value-adding services.
In addition, Vodacom was prohibited from retrenching any Neotel employees as a result of the merger.