Mascom takes over MTN Business

The country’s anti-trust body unconditionally approves the proposed acquisition of 100% of the issued share capital and all sale claims of MTN Business Solutions Botswana by Mascom Wireless Botswana, the country’s leading mobile telecoms company. “However, as stated under section 61 of the Act, this approval does not override or negate any other mandatory statutory approvals or processes that any of the parties to this merger must comply with under the Laws of Botswana,” noted Chief Executive Officer of Competition Authority, Tebelo Pule. Mascom is majority owned by DECI Investments at 60 percent and Econet Wireless holding the remaining 40 percent.In turn, DECI Investments is 66.66 percent owned by Botswana Public Officers Pension Funds and the other 33.33 percent belongs to Mobile Botswana, which is a subsidiary of MTN International, which is in turn indirectly wholly owned by MTN Group Limited. “The merger would result in the Merged Entity attaining dominant position in the market under consideration, however the dominance is not as a result of the merger, it’s a pre-existing position on behalf of the Acquiring Entity,” said Pule when making the ruling. "The merger would not enhance the Merged Entity’s ability to abuse dominant position because there will be no incentive to engage in input foreclosure post-merger"In making the Mascom-MTN Business Solutions merger assessment, the Authority noted the fact that the acquirer is already dominant in the market under consideration. "But it should be noted that Mascom is acquiring a minimal market share of the Target Firm hence the proposed merger will lead to an insignificant market share accretion. Thus, the Authority is of the view that the state of competition is expected to insignificantly change post implementation as the result of the transaction at hand." Furthermore, the Competition Authority said there is a limited countervailing power in the market under consideration due to the fact that, there is only one (1) wholesaler in Botswana (BoFiNet), where most of the downstream players source their services. However, the market is regulated and both the wholesale and retail pricing structure is transparent.“In the event of major disagreement, BOCRA intervenes and makes a determination on matters under dispute as a regulator of the relevant market. The Authority is therefore of the view that such interventions by the sector regulator will make Substantial Lessening of Competition unlikely,” said a statement. “Likewise, the proposed transaction will result in the Merged Entity acquiring a market share which is significantly below the dominance threshold of 25%. Therefore, it is unlikely for the merger to enhance or give the merged entity any market power. Post-merger, the Merged enterprise will continue to have larger players such as BTC and Orange Botswana posing a competitive constraint,” said the Authority in part.In terms of Public Interest Considerations, the findings of the assessment revealed that the employment of the Target Entity will be retained under the Merged Entity post implementation of the Proposed Transaction. “Taking this consideration into account, the Authority does not envisage any adverse public interest concerns as a result of the implementation of the proposed transaction. In light of the above, the Authority does not anticipate any competition concerns and public interests concerns to arise in the relevant market in Botswana post implementation of the Proposed Merger.”

Explore

More

Business

Mascom takes over MTN Business