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The Competition Commission has recommended to the Competition Tribunal that it approve integrated telecommunications giant MTN’s proposed acquisition of a 51% stake in Internet provider Afrihost.
The commission said on Wednesday that the transaction presented “horizontal overlaps” in the activities of MTN and Afrihost in relation to the provision of hosting, asymmetric digital subscriber line (ADSL) and mobile data services at a retail level.
Afrihost also currently resold MTN’s ADSL and mobile data services, thus, presenting a “vertical overlap” between the companies.
“The commission’s assessment of the transaction found that MTN and Afrihost do not appear to be direct competitors, because Afrihost focuses on small, medium-sized and microenterprises (SMMEs) and the residential segment, whereas MTN mainly focuses on the large corporates,” it noted in a statement.
For hosting services, the investigation further showed that there were several large and reputable information communication technology companies active in the hosting market, including Internet Solutions, Business Connexion Group, Gijima Group and Vox Telecom, presenting alternatives for customers.
In the Internet access market, meanwhile, Afrihost was a relatively small player and competed with MWEB Connect, Vox Telecom, Telkom Mobile and Vodacom, among others.
The commission added that it had received objections to the transaction from competitors in relation to the potential exclusionary conduct that could arise from the vertical relationship between MTN as a wholesaler of ADSL and mobile data, and Afrihost as its reseller.
“The commission is of the view that, in both the ADSL and mobile data markets, it is unlikely that the merger will give rise to foreclosure effects, which are harmful to SMME and residential customers, given the ability of these customers to easily switch mobile-data service providers.
“In relation to the large corporates, since Afrihost does not provide services to these customers, MTN is already in a position to engage in such conduct before the merger,” it outlined.
The concerns raised by third parties did, therefore, not arise as a result of the merger and it was the commission’s view that the merger did not exacerbate this feature.
“Overall, the commission is of the view that the proposed transaction is unlikely to result in a substantial prevention and lessening of competition in the hosting, ADSL and mobile data markets,” it stated.
The Competition Commission was, meanwhile, currently reviewing numerous other transactions in the telecommunications sector, including the acquisition of Telkom’s radio access network infrastructure by MTN, Vodacom’s acquisition of Neotel, Telkom’s acquisition of BCX and the joint venture between Dimension Data and MWEB Connect’s wireless technology division for the provision of wireless Internet services.