Vodacom’s Neotel purchase will benefit industry – WAPA

The proposed acquisition of South African fixed line operator Neotel by the country’s leading mobile operator Vodacom would benefit the industry at large, providing a nationwide high-quality operator capable of servicing consumers and businesses alike, according to the Wireless Access Providers’ Association (WAPA).

HumanIPO reported last week Vodacom said it had agreed the 100 per cent acquisition of Neotel for ZAR7 billion (US$676.6 million), with the deal expected to complete before the end of the year subject to fulfilment of conditions including gaining regulatory approvals.

WAPA said today the proposed acquisition would benefit industry in South Africa, so long as the correct structures are put in place to encourage competition in the market.

“Should the acquisition be approved with appropriate structures in place to promote and ensure fair competition, WAPA is of the opinion that the transaction could benefit the industry by providing a high-quality operator with nationwide reach, capable of delivering retail services to consumers, and wholesale services to the industry, including WAPA members,” WAPA said.

“Neotel, a WAPA member, has an excellent track record of engagement and partnership with WAPA members in collaborative projects. It is WAPA’s hope that this collaborative approach would continue in the event of Neotel being owned by Vodacom.”

Nonetheless, WAPA said it has noted a concerning trend towards consolidation of businesses in South Africa.

“WAPA is concerned by the accelerating trend towards consolidation in the telecommunications industry, this latest announcement being a case in point, although the transaction remains subject to approval by the Regulator and the Competition Commission.”

WAPA urged the newly appointed minister of telecommunications and postal services, Siyabonga Cwele, and the new minister of communications, Faith Muthambi, to take swift action with regard to addressing pressing issues of creating a long-term ICT plan for the country, as well as allocating additional spectrum in order to spur industry competition and development.

“WAPA looks forward to engaging with the incoming leadership and hopes they continue the former administration’s initiatives with all due urgency; specifically the development of a white paper to create a framework ICT policy for the next five years, and the  assignment of high demand spectrum,” WAPA said.

“These initiatives are critical to creating an enabling environment for fair and open competition and consumer protection, such that the telecommunications industry can achieve the objectives set out in last year’s SA Connect National Broadband Policy.

“Vodacom’s announced intention last week to acquire 100 per cent of Neotel should generate some urgency for the priorities and focus of the new administration.”

Image courtesy of Shutterstock.

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