Dimension Data struck a damaging blow to Telkom’s mission to dominate the South African telecommunications industry on the first day of a week long Competition Commission enquiry into Telkom’s monopolistic acquisition of Business Connection (BCX).
In his testimony at the hearing yesterday Dimension Data services director Derek Wilcocks said that as consequence of their domination of the telecoms market Telkom had acted as a monopoly and set prices at a “floor” that could not be breached by potential competitors.
Dimension Data alone has spent between R150-million and R200m so far in legal costs. “Telkom has been and is involved in uncompetitive behaviour,” said Wilcocks. “Prices could be reduced by as much as 30% with a more level playing field.”
A R2,43-billion deal by Telkom to acquire BCX was halted last week when South Africa’s Internet service providers filed a complaint that the acquisition would give Telkom too much control over the IT and communications market in the country.
In March this year BCX executives quit from their positions following a proposal by Telkom to buy the company. BCX chief executive officer Peter Watt stepped down amid claims that the deal would result in significant losses in revenue and a severe knock to the share price of BCX.
The Competition Commission has already voiced its views that the BCX deal should not be permitted to go through, but the final decision will be made by the Competition Tribunal.
Telkom senior counsel Mike van der Nest grilled Wilcocks about a licence application for bandwidth spectrum made by Internet Solutions, a subsidiary of Dimension Data, for the roll-out of a wi-max network that was aimed as competition to Telkom.
“Internet Solutions has already made substantial capital investment in their wi-max project and is not going to stop now,” van der Nest said.
He said that this was the motivation for the complaint by Dimension Data.
He also said the company was doing everything in its power to create a network that was separate from Telkom.
The hearing will continue until Friday.