Telkom confident of tribunal overturn

By Dave Glazier for Telkom
Johannesburg, 20 Nov 2006

Despite the Competition Commission's recommendation that Telkom's proposed R2.4 billion acquisition of Business Connexion (BCX) be prohibited, the fixed-line operator is confident it can persuade the Competition Tribunal to rule in favour of the acquisition.

Friday's decision by the commission, which, according to BCX CEO Peter Watt, is based on "certain competitive concerns", was received with mixed feelings, but Telkom appears unperturbed.

"The Competition Tribunal may or may not agree with the Competition Commission's recommendations," notes Lulu Letlape, Telkom's group executive for corporate communication.

"Telkom continues to believe it has a strong case, and will put forward its case to the Competition Tribunal. A pre-hearing is scheduled at the Competition Tribunal for 24 November 2006."

ISPA happy

It is still unknown why the Competition Commission blocked the proposed takeover.

Greg Massel, co-chairman of the Internet Service Providers' Association (ISPA), a staunch opponent of the proposed deal, says he expects more details to be released sometime today.

"We are obviously very pleased with the recommendation, but we have not had a chance to study the full response [by the Competition Commission]," says Massel.

Extending deadline

Watt explains that, after the pre-hearing on Friday, Telkom will have "an opportunity to argue against this [Competition Commission] recommendation at the tribunal hearings, which are not expected to occur before January 2007".

He notes that the deadline of 15 December (for all conditions of the transaction to be met, including competition authorities' approval) can be extended by the mutual consent of the two companies' boards.

"The BCX board now needs to consider the status of the transaction and consider whether an extension of the 15 December deadline can be mutually agreed with Telkom. The company reserves any further comment until then," Watt adds.

However, as Letlape points out: "If the fulfilment date is not extended by the mutual consent of both parties, then the scheme of arrangement will fail and Telkom will not conclude its acquisition of BCX."

An IT business analyst, who declines to be named, says it is unlikely the hearings will be finalised before the end of the first quarter of 2007.

The Competition Commission and Competition Tribunal were unavailable for comment this morning.