Telkom CEO Sipho Maseko
South Africa’s Competition Commission has given telecommunications giant Telkom the go-ahead to buy information and communication technology (ICT) firm Business Connexion (BCX) – with conditions.
The commission on Thursday recommended to the Competition Tribunal that the R2.67-billion deal continue on the condition that the duo mitigate any potential limiting of access to wholesale-leased lines to its downstream rivals and avoid bundling strategies that could result in anticompetitive effects.
Telkom and BCX welcomed the decision, stating that the companies remained committed to the proposed transaction and would engage and work with the necessary regulatory bodies as required.
“We believe the proposed acquisition will assist Telkom with its strategy to grow beyond its core business of connectivity by expanding into ICT services. This will enable our business to further enhance and grow its existing offerings, while at the same time providing scale in information technology services. It will also help to reinforce the company’s core connectivity business and enhance Telkom’s convergence strategy,” Telkom CEO Sipho Maseko said.
Telkom was required to base the prices for wholesale-leased lines on the actual lines used and at the nondiscriminatory transfer price for common components, in addition to ensuring that the prices for the other services and components included in the bundle were based on actual costs incurred.
The wholesale-leased lines were considered critical for the provision of downstream services such as managed network services, value-added network services, hosting and information technology services, the commission said in a statement.
The price complements for each individual service needed to be “clearly reflected” in the overall price for the bundle when Telkom offered any bundled wholesale-leased line offerings.
Further, the company was required to extend the tenure of its transfer-pricing programme from July 18, 2018, to December 31, 2020, and include fibre access for the remainder of the condition period.
In terms of job losses, the duo had to ensure that no more than 60 jobs were lost as a result of the tie up, with a limit of 20 retrenchments a year imposed for the next three years.