A South African court has ruled against the long-delayed buyout of the licences of Tata-led South African telecoms consortium Neotel by Vodacom, the local unit of global telecoms giant Vodafone.
Vodacom now will not be able to take control of licences owned by Neotel as part of the companies' planned R7-billion deal which would have given Vodacom a huge advantage over competitors. The ruling came two months after the company agreed to amend the conditions of the original deal to exclude the licences.
Telecommunications regulator Independent Communications Authority of South Africa (ICASA), which controls telecommunications in the country, had originally agreed to the transfer of the licences.
But the three biggest rival operators MTN, Telkom and Cell C, pooled resources to oppose the approval by ICASA.
Analysts said the court ruling was just a confirmation of the earlier decision by Vodacom to drop its plans for total buyout of Neotel.
Vodacom had changed its offer to exclude the licences for spectrum and electronic communication network services, opting to buy only Neotel�s fixed line assets, with Neotel then offering a roaming arrangement to its mobile network operators.
"The merger deal as originally conceived between Vodacom and Neotel is definitely dead in the water now," Dominic Cull, a telecoms attorney at Ellipsis Regulatory Solutions told the Sunday Times.
"If Vodacom had to go back to try and reapply for the licences it would take forever," Cullis added.
Vodacom had initiated the offer to Neotel in 2014 as part of its plans to grow its internet offerings in the face of more stringent regulation and pricing difficulty in the mobile phone market.
Vodacom CEO Shameel Joosub had earlier said that his company planned to speed up its fibre network deployment with the Neotel deal to provide connections to millions of houses and business parks.
ICASA had approved the buyout after lengthy hearings, despite opposition from the rival companies.
The deal had also been approved by the Competitions Commission, which set as conditions that Vodacom could not use the Neotel spectrum for a period of two years, and that the new merged company would have to make substantial investment in fixed-line services in underserviced rural areas.
Tata has a major stake in the Neotel consortium, licenced as the second fixed-line operator to rival state-owned Telkom, which has been under huge financial strain in recent years.
Telkom said in a statement that it welcomed the court ruling.
Source : http://www.moneycontrol.com/news/business/companies/tata-led-neotel-licence-buyout-prohibited-by-s-african-court-1032504.html