South Africa’s Vodacom wants to rework a $500 million deal to buy local fixed-line operator Neotel, it said on Monday, after a competition watchdog proposed conditions that could undermine the value of the transaction for Vodacom.
Vodacom, a unit of Britain’s Vodafone, also asked the Competition Tribunal to delay hearings into the deal while it works out a new structure with Neotel’s owner, India’s Tata Communications.
“The outcome of these discussions will directly impact the extent of the (regulatory) approval being sought,” Vodacom said in a statement, without giving details on how it was seeking to restructure the deal.
Vodacom has until Dec.7 to inform the Tribunal whether the transaction will be cancelled or continue in an amended form, the Tribunal said in statement.
Vodacom bought South Africa’s second-biggest fixed-line operator in a deal that gave it much-coveted radio frequency spectrum that would allow it to roll-out high-speed 4G network to meet surging demand for data.
But the Competition Commission, which investigates deals for any anti-trust issues, recommended to the Competition Tribunal that the deal should be approved on condition that Vodacom waits two years before using Neotel spectrum.
The Competition Tribunal adjudicates on findings of the Competition Commission.
South Africa is in the midst of switching its television signal to digital from analogue, a move that would free up much-needed airwaves as consumers increasingly use their smartphones to browse the internet and download applications.
Vodacom’s rivals such as MTN Group have opposed the deal, saying the acquisition of Neotel’s spectrum would give the company an unfair advantage.
Other conditions proposed by the Competition Commission required Vodacom to invest 10 billion rand ($713 million) in fixed-line network within the next five years and a moratorium on job cuts.
Shares in Vodacom were down 0.5 percent at 148.56 rand, pretty much in line with the JSE Top-40 index.