The Congress of South African Trade Unions (Cosatu) is calling upon government to stop telco monopolies, urging authorities to license more companies to provide telecoms services in the country.
Cosatu, which houses most labour unions, today reacted to the recently announced potential takeover of Telkom by MTN, warning that entrenching monopolies will distort the telecoms market.
The union made the call this morning in an interview with SABC Morning Live, as Sizwe Pamla, Cosatu’s national spokesperson, shared the labour movement’s position on the MTN and Telkom proposed merger deal.
Solidarity and the Communication Workers Union also recently expressed fears of a jobs bloodbath should the MTN-Telkom merger deal see the light.
The discussion on Telkom has gathered momentum across the country, since MTN announced it intends to acquire the telephony group and discussions to take control of the company were in progress.
Toto Investments also remains in contention to buy Telkom after making an offer to government, which holds significant shares in the company.
Government, with a 40% stake in Telkom, says it is taking a wait-and-see approach before commenting further on the proposed takeover of the telephony group by MTN.
Yesterday, Rain withdrew its bid after being chastised by the Johannesburg Stock Exchange’s Takeover Regulation Panel, which said Rain acted illegally in making its proposal public last week.
The potential takeover of Telkom has sparked industry-wide debate, with analysts telling ITWeb earlier this week that Vodacom’s move to acquire equity in Community Investment Ventures Holdings (CIVH) spooked the telecoms market, opening a race for Telkom’s assets.
The potential of the Vodacom and CIVH deal comes on the back of fierce competition in the fibre market, and analysts believe this startled the market, prompting the ongoing scramble to control Telkom’s assets.
Today, Cosatu, which is opposed to the private Telkom takeover, noted that mergers of large companies result in thousands of workers losing jobs, adding the proposed Telkom buyout will encourage anti-competitive and monopolistic behaviour.
Instead, Cosatu wants more local companies to be licensed in the telecoms sector.
“Jobs are going to get lost, the problems of cartels in South Africa is going to get worse,” Pamla told the SABC.
“What we want is competition; we want more players to be allowed to participate in the telecoms sector and if we continue with monopolies, they distort the market. They also continue to shed jobs because they move services around the world. They actually retrench, not just at a lower level, but they retrench some of the experienced and qualified people.”
Cosatu’s call to open the telecoms space to new players comes as there are industry concerns surrounding the delay in licensing the wholesale open access network (WOAN).
This, after Cabinet threw WOAN licensing into disarray by proposing amendments to remove the requirements to license the WOAN. A WOAN would operate as a single network, built via a consortium, which will sell high-demand spectrum to telecoms operators on a wholesale basis.
Government believes the WOAN will enable more competition in the telecoms market, which will result in data prices coming down.
To get licensed, according to the Independent Communications Authority of SA, applicants must be at least 70% owned by South African citizens and at least 50% black-owned. They must also be at least 20% owned by black women.
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