The Commission today recommended to the Competition Tribunal to approve MTN’s acquisition of a 51 per cent stake in Afrihost Proprietary Limited (Afrihost).
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The integrated telecommunication service provider, MTN provides mobile telephony solutions to its customers in the wholesale and retail markets, whilst Afrihost is an internet service provider operating primarily at the retail level.
“The transaction presents horizontal overlaps in the activities of MTN and Afrihost in relation to the provision of hosting, ADSL and mobile data services at a retail level,” read a statement by the Commission.
Afrihost also resells MTN’s ADSL and mobile data services thus; the merger also presents a vertical overlap.
“The Commission’s assessment of the transaction found that [DATA MTN:MTN Group Limited] and Afrihost do not appear to be direct competitors because Afrihost focuses on the small to medium enterprises (SMME) and residential segment whereas MTN mainly focuses on the large corporates.”
The Commission said for hosting services, the investigation shows that there were several large and reputable information communication technology (ICT) companies.
These include Internet Solutions (Proprietary) Limited, Business Connexion Group Limited (BCX), Gijima Group Limited and Vox Telecom Limited (Vox) amongst others active in the hosting market that are alternatives for customers to switch to.
“In the market for internet access (ADSL and mobile internet connectivity), Afrihost is a relatively small player and competes with MWEB Connect (Proprietary) Limited, Vox and Telkom Mobile and [DATA VOD:Vodacom Group Limited] amongst others,” said the Commission.
The Commission said it received objections to the transaction from competitors in relation to the potential exclusionary conduct that may arise from the vertical relationship between MTN as a wholesaler of ADSL and mobile data and Afrihost as its reseller.
“The Commission is of the view that in both the ADSL and mobile data markets, it is unlikely the merger will give rise to foreclosure effects which are harmful to SMME and residential customers, given the ability of these customers to easily switch mobile data service providers.”
The Commission is also currently reviewing numerous other transactions in the telecommunications sector including acquisition of the radio access network infrastructure of Telkom SA SOC Limited’s (Telkom) by MTN, Vodacom (Proprietary) Limited’s acquisition of Neotel (Proprietary) Limited and Telkom SA SOC Limited’s acquisition of BCX.