South Africa’s Competition Commission has recommended to the Competition Tribunal that a deal between MTN and Telkom be blocked, in which the two companies would have shared certain Radio Access Network (RAN) assets.

“Although the transaction does not involve the combination of MTN’s and Telkom’s mobile retail businesses, the Commission found that the proposed transaction is likely to substantially prevent or lessen competition in the mobile services market,” the Competition Commission said in a statement.

The Commission explained that if the deal was allowed to go ahead, it would have given MTN an advantage over other mobile networks. MTN would have put down the money for the rollout and operation of Telkom’s RAN; and each operator would have been able to roam on the other’s mobile network. It would have essentially allowed MTN to roll out faster LTE, much quicker.

“The access to additional spectrum capacity by MTN will confer first mover advantages to it relating to network speed, capacity and mobile offerings. MTN would be able to gain a significant competitive and time advantage, offering network and services that cannot be significantly constrained by rivals, particularly given the market position of Cell C and Telkom Mobile.”

Commissioner Tembinkosi Bonakele said that when all options were weighed up, the Commission was left with no choice but to block it.

“There has not been any workable solution to the concerns raised by the merger which has left us with no option but to recommend prohibition of the proposed transaction,” he said.

The denial of the deal was only a recommendation to the Competition Tribunal, but both parties have decided to throw in the towel on it.

“While the commission’s decision is disappointing, Telkom and MTN have agreed not to proceed with the transaction, as we wish to avoid a protracted [Competition] Tribunal hearing,” Telkom CEO Sipho Maseko said in a statement.

[Image – CC by 2.0/Sy]