Telkom challenges iBurst sale

Mergers, Acquisitions and Financial Results

Telkom has filed an objection at communications regulator Icasa to Multisource’s planned acquisition of iBurst and Broadlink parent Wireless Business Solutions (WBS), TechCentral has learnt.

Telkom submitted a written comment to Icasa earlier this month in which it said it is “premature” for the regulator to consider the WBS sale given that there is a public consultation process underway to finalise regulations that will govern the control of “individual” network and service licences.

“Icasa should defer further consideration of this transaction until after the requisite regulatory framework is in place,” Telkom said in response to a questions from TechCentral.

The operator’s objections come after Icasa in July asked for written submissions over the proposed sale of WBS.

Telkom has also raised objections on the transfer of control of WBS’s spectrum licences to Multisource, a company that enjoys the backing of former top bankers Michael Jordaan and Paul Harris.

In terms of the application, Multisource has previously undertaken that WBS will remain the holder of all licences issued to it by Icasa.

The Electronic Communications Act prevents the sale or transfer of an “individual licence” without prior written permission from regulator.

Telkom said the applicants had used the wrong forms in submitting their request for the transfer of WBS’s spectrum assets. They had also supplied incomplete information, thus preventing Icasa from properly assessing the application, Telkom said.

“The applicants did not follow the prescribed procedure according to the radio spectrum frequency regulations, as revised in 2015.”

Telkom said the application involves the transfer of control of high-demand spectrum in the 1,8GHz band and that this “must follow rigorous scrutiny by the authority in terms of the prescribed regulations”.

It said, too, that the applicants have supplied “insufficient information” to assess the change in black economic empowerment status.

TechCentral reported in February that WBS had undergone a successful due diligence by Multisource. The deal still requires the approval of both Icasa and South Africa’s competition authorities.

WBS has access to valuable radio frequency spectrum that could be used to build a national wireless broadband network. In particular, it has access to spectrum in the 1,8GHz band that is ideally suited to building next-generation wireless broadband networks using 4G/LTE technology.

TechCentral broke the news in October 2014 that Multisource, a company which was once listed on the JSE, had made an offer to buy the company.

At the time, chairman and shareholder Phumlani Moholi confirmed that Multisource had made an offer to buy WBS, but cautioned that it was subject to a financial and technical due diligence. Moholi is a former chief technology officer at MTN and chief IT officer for the 2010 Fifa World Cup local organising committee.

The value of the proposed acquisition has not been disclosed.

WBS shareholders include Blue Label Telecoms co-CEOs Brett and Mark Levy, the Development Bank of Southern Africa, Investec, the Public Investment Corp and former WBS CEO Thami Mtshali, who stepped down last August.

InstituteX, an investment company founded by Harris, Moholi and technology entrepreneur Brandon Leigh, acquired a 66% stake in Multisource back in 2010. Leigh, who serves as Multisource’s CEO, is the former head of Leaf Wireless, the company that distributed HTC products in South Africa until 2012
Source: Techcentral 20 August 2015