Vodacom’s proposal to acquire fixed line operator Neotel faces a major obstacle after the powerful Wireless Access Providers’ Association (WAPA) expressed its opposition to the deal.
In a statement released yesterday WAPA said it was strongly opposed to the Vodacom/Neotel transaction because it threatens competition. WAPA added that it will watch developments carefully before formulating a formal response.
This could be one of many oppositions to come against the deal with observers saying such a transaction was likely to be met with hostility by a wide variety of stakeholders including other competitors, trade unions and regulators. The other key obstacle might be BBBEE compliance of the merged entity and in particular ownership.
“WAPA believes that the acquisition would stifle competition, lead to job cuts, and do little to reduce the digital divide that it believes should be the country’s top priority with regard to broadband”.
“WAPA is seeing an increase in membership exceeding 25% per year, as smaller operators seize the gap created in the broadband market, particularly with respect to last-mile access. This is in line with international trends, where considerably more data is now carried on so-called WiFi-based technologies than on 3G and LTE”.
“The growth in smaller operators is good for the customer and good for the country,” says Christopher Geerdts, Chairperson of WAPA. It increases competition, creates jobs and drives rural broadband penetration. Larger operators tend to cut jobs and cherry-pick customers in the most lucrative suburbs and business parks.
WAPA believes that South Africa needs to build up a complementary strategy where large and small players coexist and play to their strengths. In addition, operators with a national backbone need to provide truly neutral and open wholesale services so as to open the market to competition”.
WAPA and many of its members enjoy an excellent relationship with Neotel, which has proven that strong, wholesale providers with a commitment to rural rollout can complement smaller operators with existing presence and experience in those areas.
“WAPA’s concern is that Vodacom’s influence will dampen these gains achieved, severely limit open wholesale access and set back rather than increase competition and consumer choice,” concludes Geerdts.