Unpacking the potential takeover of Telkom by MTN By OPINION - Jul 26, 2022 80 The handling of the MTN-Telkom merger by the Competition Commission will be closely watched by ordinary citizens/voters, labour unions and business people.

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Home  Opinion and Features  Unpacking the potential takeover of Telkom by MTN

OPINION AND FEATURES

Unpacking the potential takeover of Telkom by MTN

By OPINION - Jul 26, 2022 82

The handling of the MTN-Telkom merger by the Competition Commission will be closely watched by ordinary citizens/voters, labour unions and business people.

The South African government owns 40.5 percent of Telkom, while another 14.8 percent is owned by the Public Investment Corporation, which is closely linked to the government. File picture: Tracey Adams/ANA

By Corrie Kruger

THE HANDLING of the MTN-Telkom merger by the Competition Commission will be closely watched by ordinary citizens/voters, labour unions and business people.

From a policy point of view it is very difficult to see how they can allow such concentration to take place. The government will express its opinion on the deal and, therefore, the suspicion of undue influence is understandable. Twitter has responded with some of the worst comments, alleging that President Cyril Ramaphosa has stashed MTN money in Mauritius. Clearly, currently the trust in government is at a very low level.

The merits or is it demerits of the deal.

The mobile market remains stubbornly concentrated, with high levels of concentration persisting over time.

While Cell C and Telkom have had some increases in their relative market shares (particularly for Telkom), the combined shares of Vodacom and MTN have consistently covered more than 70 percent of ,the market.For the year 2019, Vodacom had a 45.5 percent share of the mobile market in terms of service revenue. MTN has the second-largest revenue share with a market share of 31.4 percent, while Cell C and Telkom have significantly less revenue share at 12.3 percent and 10.9 percent, respectively.

This current view of the mobile market appears to confirm the general view of a concentrated mobile market in South Africa This corresponds to the finding of the Data Market Inquiry that the dominant operators price independently of smaller players and that certain market features, including first-mover advantage and high barriers to entry, have perpetuated their dominance in the mobile market.

Later market entrants, (eg, mobile virtual network owners (MVNOs) and Rain) still play a peripheral role in the market, with consistently low subscriber shares of under 3 percent. Whereas historically, Telkom was the only firm with interests in undersea.

Telkom is making good progress in certain aspects.

Based on aggregated data received from the Independent Communications Authority of South Africa (Icasa) for 2019, the largest four ISPs accounted for 79.4 percent of all FTTH ( fiber-optic access solutions) subscriptions