SA's Competition Tribunal has approved Reunert's buyout of ECN Telecommunications, allowing the electronics company to get its convergence plan off the ground.
In March, Reunert said it was buying ECN, for an undisclosed sum, in a bid to become a fully converged player within a year-and-a-half. The tribunal yesterday approved the deal without any conditions.
The Competition Commission assessed the merger and decided it was unlikely to lead to “a substantial lessening of competition” and recommended it go ahead without conditions. ECN will operate as a standalone entity for about a year, but will fall under Reunert's Nashua Mobile division.
“We are delighted that the Competition Tribunal approved the acquisition. Now we can get on with some of our convergence aspirations,” says Nashua Mobile CEO Andy Baker.
Baker says ECN will run as a standalone entity for at least a year because the company doesn't want to “tinker with a successful formula”. Its products and services will be integrated immediately, he adds.
Expanded offerings
Reunert said at the time of the buyout announcement that ECN's existing portfolio of IP-based telecommunications services will add converged voice and data capabilities to Nashua.
Nashua Mobile, which also plays in the least-cost routing (LCR) space, will be able to offer converged IP offerings on the back of ECN's fixed services.
Nashua Mobile provides a range of telecommunications services and products, including mobile telecommunications services, as well as the sale of telecommunications hardware, such as cellphone handsets and related accessories.
ECN offers inbound and outbound voice call services, LCR and value-added voice services, as well as network, data, ancillary and wholesale services.
The parties told the commission the merger would be mutually beneficial as the investment in ECN's business will enable it to expand its footprint in SA. At the same time, as LCR is a dying sector, the deal will enable Nashua Mobile to provide fixed-line voice services to its clients in future.
Least-cost routers have been hard hit by the cut in mobile termination rates, and the business model is unsustainable as more cuts will trim margins to unacceptable levels.
Several players in the sector, including Altech Autopage, Vox and Nashua Mobile, have been migrating LCR customers onto voice over IP networks to claw back lost margins. Nashua has recently expanded its product offering with the introduction of a VOIP offering, EasiVoice.
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