NewsInternationalA new era of consolidation in the south

Sat,18Nov2017

A new era of consolidation in the south

By Nicholas Norbrook

Vodacom's buyout of fixed-line operator Neotel will start to sort out the men from the boys.

When Neotel opened for business in South Africa in August 2006, it was seen as just the competitor needed to push telecoms giant Telkom into improving service and dropping prices. That did not happen.

Now, Neotel's proposed buyout by mobile operator Vodacom might be a
step in the right direction.

Vodacom announced its R7bn ($656m) deal to buy the Tata Communications-owned operator on 19 May.

Analysts say this will help Vodacom compete against Telkom's alliance with the largest mobile phone company, MTN.

"This is good news for competition in both the consumer and enterprise sectors," Vodacom Group chief financial officer Ivan Dittrich told reporters.

Almost 400 telecoms operators hold network licences in South Africa, creating much competition.

The tight margins contribute to poor service, hence the call from the Independent Communications Authority of South Africa to have around four majors that would have the capital necessary to upgrade and to keep up with technological advances.

The Neotel deal is a step towards this kind of market consolidation. The current price war started by mobile operator Cell-C and taken up a level by MTN could well provoke more. ●



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