A takeover of the Tata-led telecommunications consortium Neotel in South Africa by leading mobile company Vodacom has been criticised by a rival company, MTN, which said the deal gives an unfair advantage to one party.
Telecoms regulator the Independent Communications Authority of South Africa (ICASA) last month approved the merger subject to Vodacom not using the spectrum allocated to Neotel for the next two years.
But MTN has claimed that the two-year prohibition would do little to stop Vodacom's dominant position in the market and access to Neotel's spectrum even after that would give Vodacom an unfair advantage over other players.
The proposed R7 billion deals was also earlier sanctioned by the Competition Commission, which initiated the two-year ban that was implemented by ICASA, calling on the regulator to find a way of dealing with the risk of dominance by Vodacom in the two-year period.
But newly-appointed MTN chief executive officer Mteto Nyati told the website TechCentral that this condition was not enough and the deal could end up being bad for the country.
Nyati said Vodacom can use the next two years to plan and build a network using Neotel's spectrum and simply switch it on when the commission's restriction expires.
"We have no problem about companies acquiring others. Mergers and acquisitions happen every day, and we want to encourage consolidation in our market," Nyati said.
"But this particular deal gives an unfair advantage to one party," Nyati added, warning that there is no guarantee that there will be any clarity from government or ICASA in the next two years about what spectrum MTN will get access to.
The process has already been opposed by state-owned fixed line operator Telkom, which is threatening legal action, arguing that ICASA had not followed the correct procedure in approving the Neotel buyout.
Nyati said MTN was still considering its option about joining the Telkom legal action.
Neotel was formed eight years ago to compete with Telkom as the second national fixed line operator in South Africa, driven largely by technology from Tata Communications.
