Leading South African operator Vodacom’s proposed purchase of Neotel from Indian firm Tata Communications is being delayed by the Independent Communications Authority of South Africa (ICASA), according to a report.
Last week, the Wall Street Journal reported Vodacom was close to finalising the purchase of the company for US$460 million and take over its debt.
Indian newspaper the Economic Times now reports the deal is being held up industry regulator ICASA, which is still deciding whether or not to allow the transfer of airwaves, according to three people familiar with the transaction, which is crucial to the acquisition.
When Vodacom confirmed last year it was in negotiations to buy 100 per cent of Neotel shares, it said the main reason was to strengthen its ability to provide high quality data services through acquisition of a significant allocation of high-frequency spectrum owned by Neotel as well as its expanding LTE network.
The sources told the Economic Times ICASA is considering stripping Neotel of its spectrum if the deal goes through, which puts the whole transaction at risk.
ICASA has already publicly expressed concern at the level of competition within the ICT sector and launched an investigation last month, which may affect the proposed acquisition, which comes after Vodacom rival MTN signed a deal with Telkom providing MTN with additional spectrum.
The Wireless Access Providers’ Association (WAPA) also said last year it was wary of the Neotel acquisition as it could stifle competition within South Africa’s telecommunications sector.
