JSE-listed Vodacom is already the dominant mobile operator in South Africa and the proposed acquisition of converged communications network operator Neotel will compound its position and lead to the potential destruction of competition, MTN told stakeholders at a public hearing on Friday.

On the final day of the two-day Independent Communications Authority of South Africa- (Icasa-) led public hearings into the deal, MTN CTO Eben Albertyn said the deal emerged at a turbulent time in the South African telecommunications market where operators faced an uphill battle to meet the demands of a data tsunami amid constraints of limited spectrum, fibre and radio sites.

The proposed R7-billion acquisition currently under the microscope would solve the constraints of fibre and spectrum for Vodacom, thereby providing an unfair advantage for an already-dominant player, he said.

Albertyn pointed out that Vodacom’s financial, structural and market dimensions were significantly greater than those of its rivals MTN, Cell C and Telkom Mobile, with its only constraint being access to sufficient spectrum for the deployment of a long-term evolution (LTE) network.

Vodacom was already positioned to dominate the LTE market, as it held  two-thirds of the market, with one-million LTE subscribers.

The telecommunications group, which boasted 10 200 radio sites, servicing 32-million subscribers, had yearly revenues of R60-billion and capital expenditure (capex) of R8.5-billion a year.

In comparison, MTN reported revenue of R38-billion and a yearly capex of R6.3-billion to support 7 800 sites for 25-million subscribers.

Cell C and Telkom Mobile’s revenue, infrastructure and spend was only a fraction of the two bigger competitors.

Further, Vodacom would benefit from an additional, structural cost, time-to-market and capacity advantage relative to its mobile competitors, as well as a cost advantage of 50%, as the access to additional spectrum eliminated the need to build out an excessive number of radio sites to meet demand.

This meant that it was unlikely competitors could match this scale.

“The authority must now consider whether it is in the public interest to overlay a spectrum and fibre advantage to an already dominant player,” MTN noted during its presentation to Icasa, with Albertyn stating that Icasa’s approval of the transfer of control for Neotel’s licences to Vodacom would be a “gift”.

MTN believed that the spectrum should be returned to Icasa and reassigned under the still-under-development spectrum policy to ensure a more pro competitive market.