After trying to buy network and business service specialist Neotel for well over a year, and setting aside R7 billion for the transaction, mobile operator Vodacom has today announced that the deal will go ahead, but it will only acquire “the majority of” Neotel’s fixed line business assets and not its spectrum licenses.

The mobile operator was originally hoping to acquire Neotel, and made no secret of the fact that its primary interest was in Neotel’s spectrum licences. All mobile networks are currently feeling constrained by lack of access to spectrum, largely because of South Africa’s failure to meet international deadlines to shut down analogue TV and free up the airwaves for data.

This new deal however, excludes Neotel’s spectrum frequencies from the deal. Neotel has three different spectrum ranges namely, 2×12 MHz of 1800 MHz, 2×5 MHz of 800 MHz and 2×28 MHz of 3.5 GHz. 800MHz and 1800MHz are ideal candidates for LTE services.

Access to this spectrum would have given Vodacom a significant edge over competitors MTN and Cell C, both of which have expressed opposition to the deal. Cell C boss Jose dos Santos repeatedly threatened to tie the deal up in court battles if it met with approval.

Vodacom and Neotel were set to attend a hearing before the Competition Tribunal this week regarding the merger of the two companies and have reported the changes to the Tribunal ahead of this.

“Accordingly, Vodacom South Africa and Neotel have submitted to the Competition Tribunal the signed transaction documentation in respect of the restructured transaction,” the operator said in a statement to shareholders.

On Thursday the Competition Tribunal will consider the reworked transaction at a pre-hearing at which point we should know more about whether this transaction, and the merging of Vodacom and Neotel, will move forward.

[Image CC by 2.0 – Doug Zwick]