According to the commission, “Post-merger, BCX will become a wholly owned subsidiary of Telkom, and will delist from the Johannesburg Stock Exchange (JSE).”
The Competition Commission has made the recommendation subject to the imposition of certain conditions, to be met by both parties.
The deal is still awaiting approval from the Independent Communications Authority of South Africa (Icasa).
“We believe the proposed acquisition will assist Telkom with its strategy to grow beyond its core business of connectivity by expanding into ICT services. This will enable our business to further enhance and grow its existing offerings, while at the same time providing scale in IT services,” said Telkom CEO, Sipho Maseko.
Dimension Data however wants the Competition Tribunal to impose additional constraints on Telkom if the deal goes ahead.
“We are not trying to get the deal stopped — I think that’s an important thing for me to emphasise — but what we are trying to ensure is that once the deal has gone through, we have a situation where relatively free competition is allowed,” says, Didata and Middle East CEO, Derek Wilcocks.
“Our concern, in a nutshell, revolves around two things. The first is on the input cost side of things, where we are worried that we could be foreclosed,” he says. “In essence, Telkom in many parts of the country, and for certain specific product sets, is still a very dominant player. We want to ensure we don’t end up in a situation where Telkom can provide those services to itself at prices that make it impossible for us to compete.”
BCX CEO, Isaac Mophatlane, does not agree, saying that Telkom is no longer the dominant player in the market, so imposing further conditions is unnecessary.