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Telecommunications giant Telkom and mobile operator MTN on Monday abandoned their bilateral roaming agreement and bid to have Telkom’s radio access network (RAN) transferred to MTN after the Competition Commission dismissed the proposed deal.
MTN and Telkom last year entered into a network management services agreement and reciprocal roaming agreements, which would have resulted in MTN taking over financial and operational responsibility for the roll-out and operation of Telkom’s RAN and allow the duo to roam on each other’s mobile network.
The commission last week decided not to recommend the deal for approval by the Competition Tribunal as it believed the agreement could provide MTN “significant competitive and time advantage” through additional access to Telkom’s spectrum and likely to “substantially prevent or lessen” competition in the mobile services market.
Further, the deal would have stunted Telkom Mobile’s ability to aggressively grow and respond to competition, as the agreement would have limited the mobile data capacity available to Telkom, the commission said in a statement on Monday.
“I am satisfied with our legal and economic analysis of this proposed merger and, therefore, confident that our recommendation to block it is sound.
“The decision protects competition in telecommunications, a very important market for our economy now and in the future,” Commissioner Tembinkosi Bonakele said, adding that none of the concerns raised by the proposed deal had been offset by “workable” solutions.
“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 [Competition] Tribunal hearing,” Telkom Group CEO Sipho Maseko said in a statement.
He indicated that the reversal of the deal would not impact the group’s ambitions of derisking its mobile business, as the 18-month restructure had resulted in a “viable and sustainable” unit that would break even in the current financial year.