Expert testimony halts initial Telkom merger

Genesis was retained to provide expert economic analysis on behalf of the Internet Service Provider Association (ISPA), which was pivotal in the successful opposition to the initial attempted merger between the incumbent fixed-line operator, Telkom, and one of the largest IT companies operating in South Africa, Business Connexion.

The project team’s competitive assessment found that Telkom enjoyed a dominant position in data connectivity, fixed-line voice and mobile voice services through its subsidiary at the time Vodacom, and that it had been able to extend its dominance in these areas to gain an ever-increasing market share in the retail and wholesale value-added network services business.

The analysis focused on the potential for the merger to result in anti-competitive foreclosure and bundling, as well as on the horizontal overlap between the parties. The Competition Tribunal ultimately prohibited the transaction.