Vodacom-Neotel deal update

This is either a really good thing for telecoms in this country,

Or Vodacom are gonna continue being ridiculously greedy and fsck it all up.
 
Joshi said that this issue will be handled when the time comes, but he is confident that South Africa’s regulatory structures are mature enough to make the right decision.
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Yep they probably are, the right decision is that you Vodacom can't have it. Neotel can be owned by Vodacom and can keep and use their spectrum but absorb Neotel in and scrap it down and say bye bye to the spectrum .... Wholesale LTE network FTW
 
ToxicBunny said:
This is either a really good thing for telecoms in this country,

Or Vodacom are gonna continue being ridiculously greedy and fsck it all up.
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Its a really bad thing as this means less competition.
 
If the spectrum is in use it must go with Neotel, if not used then it must return to the spectrum pool.
 
cfilorux said:
Neotel isn't doing anything useful at the moment.
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I agree and that is why it might be useful if Vodacom takes it over and make something with it. Neotel was meant to be a fixed line competitor to Telkom but nothing came of it. The expectations Neotel created in the market was never reached, not even close.
 
cfilorux said:
Neotel isn't doing anything useful at the moment.
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I agree and that is why it might be useful if Vodacom takes it over and make something with it. Neotel was meant to be a fixed line competitor to Telkom but nothing came of it. The expectations Neotel created in the market was never reached, not even close.
 
cozinsky said:
I agree and that is why it might be useful if Vodacom takes it over and make something with it. Neotel was meant to be a fixed line competitor to Telkom but nothing came of it. The expectations Neotel created in the market was never reached, not even close.
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In the corporate sector, they're doing pretty decently....

Residentially, they're nowhere.
 
I've been enjoying Neotel's improving products on the wholesale and business side. I don't think consumer is even worth mentioning.

Vodacom is the opposite - all consumer and very poor on business and wholesale.

Unfortunately putting them together won't produce a 1 + 1 = 3 situation. The result is more likely a 1.5, especially if ICASA stays awake on controlling their market dominance areas.

Nothing good here for Joe Public I am afraid
 
And, if ICASA reclaim neotel's spectrum, would Vodacom still go through with the deal at that price level? Methinks not.
 
the spectrum issue is bloody important and I really do get the idea that there is an erroneous binary thinking on the subject and a lot of muddy waters on the "competition" front - I might have misread between the lines what Vodacom was saying at the LLU workshop about ducts and so on but I got the distinct impression that they are having a lot of uncertainty on treading forward.

My view - stated probably 100 times over is:
1) That Vodacom can acquire 100% of Neotel without any problems and as long as Neotel meets the threshold to be a licensee the spectrum allocation stands - there is no use it or loose it principle yet nor would a change in ownership affect the allocations of a licensee
(I cannot see any ownership problems with Vodacom owning Neotel under the ECA because Vodacom meets the HDI requirements and there isn't inherently a reduction in competition in the market)

2) Neotel requires a massive targeted cash injection in order to use its spectrum effectively and a Neotel LTE wholesale network would be a major move forward. Acquiring Neotel requires more than simply buying out existing investors and would represent a massive project on Vodacom's part.

3) The acquisition of Neotel by MIH or MWEB would pose a threat to the businesses of Vodacom, MTN, Dimension Data (IS) and Telkom. No doubt blocking off Naspers is a factor that can drive up the value of Neotel. Furthermore Neotel has an iECNS and iECS licence combination and their are a limited number of these going around.

4) Neotel's customer base can largely be migrated to Vodacom and the business customer base acquisition could be very good for Vodacom. I am concerned however that there may be problems arising in some of the enterprise contracts and some of our prevailing competition and consumer information practices that would prevent a direct takeover and acquisition of the customer information - if you look at the Telkom//Comp Comm settlement the direction a prospective merger might be pushed towards surfaces. It would make more sense for Vodacom if it is able to sell Vodacom products through Neotel however I doubt that it can do much more than

5) I firmly believe that Vodacom could have major benefits in owning a company against which they can raise capital without exposing their core business and the migration of many of Neotel assets into SPVs could get some investment funds into the sector especially from abroad without all sorts of other nonsense.

6) Vodacom owning a VMNO running on Vodacom's 2G voice network (an deliberately vague term) would allow Vodacom to offset the "damage" caused by asymmetry (Neotel would benefit from asymmetry and in addition to any roaming fees would enjoy the equity benefits from the asymmetry benefiting small market share holders) and there is a market to be built on SLA carrying EDGE based product offering - with FastNet owned by Telkom as an example (actually Neotel as Vodacom's FastNet is sort of the case ...). There are several speciality markets which Neotel could slot into as a VMNO without cannibalizing (or otherwise threatening) Vodacom's current subscriber base.

With capital and the right leadership Vodacom can really turn Neotel into something great.
Now if spectrum is a facility (and I don't believe it can be) then a facilities leasing approach from Neotel to Vodacom.

What confuses me about Vodacom's approach though is that they don't appear to be looking at the deal within the context of a natural consolidation in the overall market.
 
From what I read above it appears it would not be good for us consumers? Any private consortium out there who can bring in the tech skills through a suitable buyout and finance the whole thing? If it's a good buy, their investment grows and we benefit. I'm all for competition!!
 
there isn't really a consortium who would be able to make the sort of capital injection that could jump start things; I am in favour of a VC acquisition BUT they need to get the separation of entities right
 
marine1 said:
Surprised this will be allowed by the competition commission
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Why? The only major competition issue that could arise is if VC is able to take spectrum from the transaction by shutting down Neotel and it is already the case that dissolving Neotel means spectrum goes back to the general pool ...
 
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