Telkom-BCX probe drags on

By Nicola Mawson for Telkom
Johannesburg, 22 Sep 2006

Telkom`s intended takeover of IT services firm BCX could take much longer than the telecommunications company intended.

Telkom`s group executive of corporate communications, Lulu Letlape, previously stated that the company expected the entire deal to be wrapped up by year-end, implying the Competition Commission and the Competition Tribunal would give the go ahead.

While market commentators have stated they did not expect the Competition Commission to refer the matter to the tribunal before year-end, Liz'el Blignaut, the commission`s divisional manager of mergers and acquisitions, could not be specific about the time line.

She said mergers were - at the best of times - complex and required thorough investigation. In this case, with recently promulgated legislation and Neotel`s arrival, the "crystal ball" of setting an end date was impossible. "We are not at the stage at which we can give a certain date. This is most probably the case of the year."

The complex transaction, she says, is also significant as it could have ramifications for the country`s economy. "The last thing we want to do is make the wrong decision."

Objections

A number of objections have been received from concerned groups of companies and individuals in SA, she says. Some of these centre on aspects such as access to infrastructure and cross subsidisation, which could impact on competition in the economy.

The commission has not made any conclusions around these objections as yet, she says. Instead, it will ensure that there is a thorough investigation of each objection.

The commission, which received the mandate to investigate in mid-June, hopes, however, to wrap up its investigation as soon as possible. "Like any investigation you get one answer, but it raises two more questions."

The tribunal stage, she says, is likely to be an information intensive stage.

Telkom`s shares were trading at R136.45, 1.12% down on the day by 4.20pm. On Wednesday, its shares closed at R138.00. BCX`s shares were unchanged at R7.88, substantially off Telkom`s offer of R9 a share, and a 25c a share dividend, which makes the deal worth R2.43 billion.