Vodacom South Africa to face competition tribunal

Mergers, Acquisitions and Financial Results

Listed telecoms company Vodacom will appear before the Competition Tribunal on April 26. The tribunal said on Wednesday Gogga Tracking Solutions had brought an interim relief application against Vodacom.

Gogga would ask the tribunal to order Vodacom to sell it data at 19 cents per megabyte as this was the same price that Vodacom charged the general public. In addition, Gogga wanted the tribunal to stop Vodacom from interfering with any of its telecommunications facilities provided to customers.

It also wanted Vodacom to refrain from demanding payment for past accounts and expenses incurred -- which Gogga disputed. According to Gogga, it bought internet access products in bulk, exclusively, from Vodacom during May 2005 and then structured its own packages which were sold competitively into the end user market.

Gogga submitted that this data was brought at the initial price of 19 cents per megabyte from Vodacom. It maintained it introduced various end-user specials to be competitive in the market and that the model used by it became a success and performed extremely well.

Gogga said its competitors at the time were Vodacom, MTN, iBurst  and Cell C. According to Gogga, Vodacom unilaterally stopped the bulk purchasing model in July 2007 claiming it was disrupting the market  and was a misuse of its available products.

Gogga said it was also informed by Vodacom that it (Vodacom) was making a loss and could not supply data at that rate any longer. According to Gogga, the prices were then increased from 19 cents to 136 cents per megabyte but were then subsequently reduced to 60 cents per megabyte.  Gogga claimed that the wholesale price of the data which Vodacom charged was much higher than the retail price charged to end users.

According to Gogga, the actions of Vodacom resulted in its business suffering and this also had an impact on its customers. Gogga Tracking claimed that Vodacom also stopped it from activating any SIM cards to end-users for a period of 15 months and that during this time, Vodacom proceeded to enter the very same market.

It is Gogga Tracking's submission that Vodacom manipulated the prices and effectively stopped it from doing any business due to the fact that its account was in arrears. Gogga said that it was only allowed to enter the market again after 15 months and by that time, Vodacom had already captured the market.

Vodacom has denied all the allegations brought against it by Gogga.
(Source: MyBroadband)

* France Telecom, Orascom end dispute over Mobinil

France Telecom and Orascom Telcom Holdings have ended their legal dispute over Egyptian operator, Mobinil.
Both parties, who jointly share control of Mobinil, have agreed to pursue a new shareholder agreement that would end the two year long dispute, according to BusinessWeek.com.

France Telecom agreed to change its accounting methods to fully consolidate Mobinil under the agreement, while Orascom will consolidate its participation in Mobinil through “equity method.”

According to the new agreement, the company structure will not undergo any changes, raising questions about France Telecom’s intent to acquire minority shareholders in Mobinil.

Recently, France Telecom Chief Executive Officer, Stephane Richard, announced ambitious plans to double revenue in emerging markets within the next five years, spending as much as $9,6 billion on deals in Africa and the Middle East.

According to Cairo-based investment bank CI Capital, “Orascom Telecom has managed to keep its ownership in Mobinil intact and strengthen its stronghold”.
Khaled Bichara, Chief Executive Officer of Orascom, said the agreement was received well by both parties.

France Telecom and Orascom were locked in a complicated legal battle over control of ECMS, referred to commonly by its brand name Mobinil. Under the current structure, ECMS is 51% owned by a holding company that is 71.25% controlled by France Telecom’s unit, Orange Participations, and 28.75% by Orascom Telecom. Orascom also controls a direct 20% stake in ECMS.

France Telecom had opened a bid for the outstanding shares in ECMS, an offer that was taken to court by Orascom, who claimed the selling price was lower than the price set in the previous arbitration.

Orascom, headed by Egyptian billionaire Naguib Sawiris, and France Telecom, have been disputing Mobinil’s ownership since 2007.