Wireless body opposes Vodacom’s Neotel bid

Mergers, Acquisitions and Financial Results

South African mobile operator Vodacom’s bid to acquire fixed line telco Neotel has been met with resistance from the country’s Wireless Access Providers’ Association (WAPA).

WAPA, which acts as a collective voice for independent wireless operators in the country, says the sale of Neotel could stifle competition, lead to job cuts and do little to reduce the digital divide.

WAPA’s sentiments follow the announcement made by Vodacom SA earlier this week that it has entered into exclusive talks regarding the potential buyout of 100% of the shares of Neotel.

Neotel is a South African converged telecommunications network operator that provides a range of value-added voice, internet and data services for businesses and wholesale network operators. Neotel’s main competitor in the fixed line market is Telkom.

According to a statement from Vodacom SA, the finalisation of the transaction is subject to the successful conclusion of commercial negotiations and receiving the requisite regulatory and corporate approvals.

However, WAPA chairperson Christopher Geerdts has aired grievances regarding the potential sale of Neotel.

“The growth in smaller operators is good for the customer and good for the country. It increases competition, creates jobs and drives rural broadband penetration. Larger operators tend to cut jobs and cherry-pick customers in the most lucrative suburbs and business parks,” Geerdts said.

But in a statement earlier this week, Vodacom said that if the transaction is concluded, it could stimulate greater competition in the South African fixed line telecommunications sector and possibly accelerate the provision of high speed data links.

It further stated that this deal could also result in the combined entity being able to offer an expanded product range.

Speaking about the potential deal, Vodacom Group chief executive officer Shameel Joosub said, “If the deal is implemented, Vodacom intends to put significant investment into the combined entity to provide high-speed fixed connectivity to many more businesses and consumers.”

Joosub added, “By further building on the capabilities within Neotel, we would also aim to develop entirely new services such as fibre to the home and business.”