/ 16 February 2009

Commission approves Vodafone-Vodacom merger

The Competition Commission has recommended the approval of the proposed large merger between Vodafone and Vodacom, it said on Monday.

It has referred the transaction to the Competition Tribunal for approval.

Currently, Vodacom is jointly owned by Telkom South Africa, which holds a 50% stake in Vodacom, and Vodafone, which also holds 50%.

In terms of the proposed transaction, Vodafone will acquire a further 15% of the issued share capital in Vodacom from Telkom.

Vodacom will be listed on the JSE and Telkom will unbundle its remaining 35% shares in Vodacom to its own shareholders.

On completion of the proposed transaction, Vodafone will hold 65% of the issued share capital of Vodacom. The remaining shares of Vodacom will be publicly held.

Vodafone will exercise sole control over Vodacom post-merger, the commission said.

During its investigation of the proposed merger the commission established that Vodafone did not compete with Vodacom in any of the product markets in South Africa.

”The commission is also of the view that the vertical integration between the parties is unlikely to result in any substantial prevention or lessening of competition,” the commission said.

The commission contacted the merging parties’ competitors and customers to solicit their views regarding the proposed transaction.

No significant competition concerns were raised by either the customers or competitors of the merging parties.

The commission’s investigation revealed that there were ”other credible players in the relevant markets in which the merging parties were involved”.

The commission also concluded that there were ”no significant public interest issues that warranted a prohibition or conditional approval of the transaction”.

The tribunal will hold public hearings into the matter on February 25 at 10am. — Sapa