[11 April 2017]
The Supreme Court of Appeal judgement we received shows Neotel’s appeal was unsuccessful on technical grounds.
Judgment – Neotel (Pty) Ltd v Telkom SOC others
[20 March 2017]
Neotel lost its appeal in the Supreme Court. This means the High Court’s decision remains in effect. The High Court ruled that companies seeking approval to take control of individual service licenses need to have at least 30% ownership by historically disadvantaged groups. We’ll review the court’s judgment before making any further statements.
[28 November 2016]
The Supreme Court of Appeal scheduled the appeal hearing for March 17, 2017.
[1 November 2016]
Neotel, after receiving permission to appeal from the High Court, submitted their arguments to the Supreme Court of Appeal. They argue that the High Court made a mistake by requiring a 30% ownership stake by historically disadvantaged persons for approval of transferring control over individual service licenses.
Neotel Heads of Argument for SCA
[10 October 2016]
Neotel has filed a new application with ICASA to transfer control of its licenses to Liquid Telecommunications, despite an ongoing appeal to the Supreme Court regarding the failed Vodacom acquisition.
How to Submit Your Written Comments:
- Deadline: Submit your comments by 4:00 pm on Monday, October 17th, 2016.
- Recipient: Independent Communications Authority of South Africa (ICASA)
- Contact: Ms. Refiloe Motsoeneng, Project Manager: Market Consolidations
- Address: Block A, Pinmill Farm, 164 Katherine Street, Sandton 2146, South Africa
- Fax: 011 566 3214
- Email: RMotsoeneng@icasa.org.za (preferred) or MarketConsolidations@icasa.org.za
- Proof of Delivery to Neotel: You must also provide proof that you sent a copy of your comments to Neotel (Pty) Ltd. Here are the options for delivering to Neotel:
- Address: 44 Old Pretoria Main Road, Halfway House, Midrand 1685, Gauteng, South Africa
- Fax: 011 585 0001
- Email: Candice.Breval-Green@neotel.co.za
[29 April 2016]
Neotel is contesting the High Court’s ruling on ownership by HDIs. Their appeal will be heard on May 13th, 2016.
[21 March 2016]
Neotel has filed an appeal against a specific section of the High Court’s judgment (covered below). This decision has significant implications for transforming South Africa’s telecommunications and broadcasting industries, particularly regarding ownership by Historically Disadvantaged Individuals (HDIs) as mandated by the Electronic Communications Act.
Interestingly, this appeal comes after the Vodacom acquisition of Neotel fell through. Despite the lack of immediate impact, Neotel is still willing to incur the costs of seeking legal clarity on this point, highlighting the case’s broader importance.
Notice of Motion: Application for leave to appeal
Neotel disagrees with the court’s decision. Their legal filing claims the following:
- The 30% HDI ownership rule only applies to new licenses, not transfers. The court made a mistake by saying this rule applies to both.
- The court’s interpretation creates an unnecessary burden. If the rule applies to renewals and changes, companies would always need 30% HDI ownership, which wasn’t the original intent.
- The regulator (ICASA) has the flexibility to grant time for compliance. Even if the 30% rule applies, they believe ICASA can give companies extra time to meet the ownership requirement.
[6 March 2016]
After a court ruling, the proposed deal between Vodacom and Neotel on March 1, 2016, was called off. The court case involved ICASA’s approval of transferring Neotel’s licenses to Vodacom. The judge found that ICASA had an unfair meeting with Vodacom, raising concerns about favoritism. Because of this, both companies agreed to abandon the deal and stopped pursuing approval from regulators.
Vodacom was criticized by the Court.(@pp35-36):
Having regard to all these considerations, I am of the view that a reasonable, objective and informed person, having regard to these facts, would reasonably apprehend that ICASA would not have brought an impartial mind to bear on the application before it. I therefore conclude that it has been proven that ICASA as the administrator who took the decision is reasonably suspected of bias. I have to point [out] that Vodacom played an active role in this regard by initiating the process giving rise to this finding.
The Court ruled that ICASA made a mistake by letting Vodacom move forward with their application. Vodacom hadn’t met the ownership requirement of having at least 30% ownership by Historically Disadvantaged Individuals (HDIs) at the time of applying. The Court said this ownership stake needs to be in place from the beginning, and ICASA couldn’t simply allow Vodacom to comply with this requirement later on.
[26 February 2016]
In a decision delivered this morning, the High Court overturned ICASA’s approval of Vodacom’s application to take control of Neotel’s licenses. This follows a legal challenge against the regulatory body’s initial decision.
ICASA Vodacom Neotel Licence Transfer High Court Review Judgment
[9 December 2015]
It seems the Neotel acquisition by Vodacom is facing the challenges many expected. News outlets are highlighting Vodacom giving up on Neotel’s spectrum licenses, but the real reason for the deal restructuring is to remove these licenses entirely. Why? Because it’s become clear that transferring these licenses (or control of them) to Vodacom simply won’t be approved.
[12 October 2015]
MTN Notice of Motion and Founding Affidavit
MTN has filed a legal complaint against the Independent Communications Authority of South Africa (ICASA). The complaint concerns ICASA’s approval of Vodacom’s purchase of Neotel’s licenses for service and radio spectrum.
What MTN Wants:
- MTN wants a judge to review ICASA’s decision and potentially overturn it. This would block Vodacom from acquiring Neotel.
- Alternatively, MTN wants the court to review ICASA’s decision allowing Vodacom to take control of Neotel’s specific radio frequencies (850MHz, 1800MHz, and 3.5GHz bands).
Similar Challenges and Upcoming Hearing:
Other mobile operators, Telkom and Cell C, have also filed similar complaints against ICASA regarding this deal. Due to these overlapping challenges, a court will hear all three cases together in mid-November (11th, 12th, and 13th).
Key Point:
The court hearings in November will be crucial for determining whether Vodacom’s acquisition of Neotel goes through.
[5 October 2015]
A copy of Cell C’s Notice of Motion and Founding Affidavit (121 pages, excluding annexures) is available for your review Cell C Notice of Motion and Founding Affidavit
Meanwhile it seems that
- MTN has joined the fray (according to this article on Techcentral)
- ICASA and the Competition Commission are at odds (according to this article on Business Day)
[1 October 2015]
Cell C is challenging ICASA’s approval of Vodacom’s acquisition of Neotel’s licenses in court. They filed an application in the Gauteng Division of the High Court to have the decision reviewed and overturned. Cell C argues that ICASA should re-evaluate the application according to the latest Radio Frequency Spectrum Regulations from 2015.
The court date for their case has been set for November 10th, 2015.
[17 August 2015]
ICASA published a document outlining the rationale behind their approval of applications for transferring control of Neotel’s service and spectrum licenses.
Reasons Document Neotel Vodacom Decision
[17 July 2015]
ICASA’s approval of Vodacom’s acquisition of Neotel’s licenses, which many expected to be challenged, is now under review by the High Court. Telkom is the leading voice against ICASA’s decision, citing flaws in the approval process, and likely won’t be the only one.
Notice of Motion and Founding Affidavit 1 of 2
Notice of Motion and Affidavit 2 of 2
[9 July 2015]
We acquired the publicly available Competition Commission report on the proposed deal. This report explains why the Commission recommends approving the transaction, but only if specific conditions are met.
Vodacom Neotel Non-Confidential Report
[2 July 2015]
Public Notice Vodacom and Neotel Transaction
ICASA announced in an official publication that they’re considering specific conditions for approving Neotel’s request to transfer control of its licenses (IECNS, IECS, and radio frequency spectrum) to Vodacom. The public is invited to submit written comments on these proposed conditions.
The plans address two key areas: ownership by disadvantaged groups and service rollout in neglected areas.
First, the Applicants are required to comply with the requirement for 30% (thirty percent) of the equity ownership of the individual licence that is the subject of the transfer of control application being held by persons from historically disadvantaged groups (“the BEE Requirement “), as contemplated in section 13(6) read with section 9(2)(b) of the EC Act. The Authority, however, recognises that it may not be practicable for Applicants to comply with the BEE Requirement from the onset. Therefore the Authority wishes to determine the reasonable period within which the Applicants should be permitted to ensure compliance with the BEE Requirement; and
Second, the Authority has established that the implementation of the proposed transaction will result in consolidation of spectrum. The Authority recognises that broadband access across the country remains a challenge that needs to be addressed with due speed. The Authority views the implementation of transactions such as the present to offer an opportunity, amongst other initiatives, for the Authority to utilise the regulatory instruments at its disposal to facilitate the attainment of universal service and access to broadband services by all South Africans, with priority being given to rural and under serviced areas (as defined in the Under Serviced Area Regulations, 2011). Accordingly, in accordance with the provisions of section 13(6) read with section 9(2)(c) of the EC Act, and in order to ensure the utilisation of spectrum (which is a scarce resource) to achieve the developmental goals of the Republic of South Africa in relation to broadband, the Authority is considering the imposition of the condition that at least 25% (twenty five percent) of any broadband roll out to be undertaken by Neotel following the implementation of the transaction (with the specification of a minimum of 5Mbps), be undertaken in under serviced areas (hereinafter “the USA Roll – Out Condition “).
ICASA acknowledges that they considered the impact of combining a lot of valuable spectrum under Vodacom’s control. However, they can’t regulate competition yet. They’ll need a more thorough investigation following specific regulations.
The good news is that ICASA might do this investigation in the future.
If you have an opinion on:
- How long companies should have to meet Black Economic Empowerment (BEE) requirements.
- Reasonable goals and timelines for building infrastructure in underserved areas (USA Roll-Out).
You can submit your comments to:
- Ms. Refiloe Motsoeneng, Project Manager: Market Consolidations
- Fax: 011 566 3214
- Email: RMotsoenencaicasa.org.za and MarketConsolidationsAicasa.org.za
Deadline for submissions: Thursday, July 23, 2015
[30 June 2015]
Competition Commission press release
The Competition Commission has given the green light to the Vodacom-Neotel merger, but with some important conditions.
Conditions of the Approval
- Spectrum restriction: Vodacom can’t use Neotel’s spectrum for mobile services for two years. This is to allow policymakers time to address industry spectrum issues.
- Investment in infrastructure: Vodacom must invest R10 billion in fixed network infrastructure over five years. Half of this investment must go towards improving home and business services in South Africa.
- Black economic empowerment (BEE): Vodacom must increase the value of shares held by BEE shareholders by R1.4 billion within two years. They also can’t lay off any Neotel employees due to the merger.
Next Steps
The Competition Tribunal will now decide whether to approve the Competition Commission’s recommendations.
[22 June 2015]
Reports suggest ICASA might conditionally approve Vodacom’s acquisition of Neotel’s licenses, as requested by Neotel (details below). News from June 18th, 2015 indicated approval with two conditions: transformation and roll-out obligations. While details were supposed to be public on June 20th, the media event was canceled. Despite the lack of a formal announcement, ICASA’s chairperson defended the decision, even though industry players threaten legal challenges.
We believe ICASA’s decision can be challenged. The long wait for a decision is concerning and highlights unacceptable delays ICASA imposes on licensees’ business decisions. The Competition Commission’s decision on the deal is expected soon.
[21 December 2014]
Including responses from Neotel and Vodacom
[17 December 2014]
Links to public submissions regarding ICASA’s proposed transfer of control over Neotel’s licences are now available.
[15 December 2014]
Notice for Public Hearings for Neotel Vodacom Transaction
The Independent Communications Authority of South Africa (ICASA) will be holding public hearings on the proposed transaction. The hearings will take place on the following dates:
- Dates: 15 and 16 January 2015
- Time: 09h00
- Venue: Block C Presentation Room (ICASA), 164 Katherine Street, Sandton
[1 October 2014]
We have secured a copy of the formal application submitted to the Independent Communications Authority of South Africa (ICASA).
Vodacom Neotel Letter of Application for transfer of control of service licences and spectrum
[18 September 2014]
Application for Approval of the Acquisition of Neotel by Vodacom (ICASA)
The South African communications authority, ICASA, is inviting public comment on a request to transfer control of Neotel’s licenses for individual electronic communication services and networks. Submissions are due by October 7th, 2014.