Telecom/Leo merger approved
The Namibia Competition Commission (NaCC) has approved the proposed merger between Telecom Namibia Ltd and Powercom (Pty) Ltd but the merger comes with conditions set on the structure and coordinated behaviour.
The conditions are centered on two competition specific concerns, namely the extent to which the post-merger market situation will result and the extent of a possible collusive or coordinated behaviour that would likely prevent or lessen competition. According to the commission’s chief executive and secretary to the commission, Mihe Gaomab II, the approval conditions were in the interest of preventing any collusive or coordinated behaviour that would undermine the free and spirited competition for all entities in that sector, including Telecom and MTC.
One of the approval conditions state that from the effective date of the implementation of the merger, the merging parties should put in place a separate and independent shareholding structure for Telecom Namibia Ltd and that of MTC. This separation of the holding structure must be effected within a period of two years from the date of this notice determination, the commission ruled.
Another condition set by the Commission states that in the two year period, no person who is a director of Telecom Namibia or an employee of Telecom Namibia may serve as a director of either Namibia Post and Telecommunications Holdings (NPTH) or MTC and likewise, no person who is a director of MTC or any employee of MTC may serve as a director of either NPTH or Telecom Namibia. This meant that the current NPTH Chief Executive Officer, Frans Ndoroma, who is also the managing director of Telecom Namibia, as well as the head of Legal Services and company secretary of Telecom Namibia, Patience Kangueehi-Kanalelo are to resign from their respective positions at NPTH with immediate effect.
“The set conditions are therefore imposed to mitigate the negative impact that the merger may have on competition in the relevant market/mobile telecommunication market,”Gaomab II stated. NPTH holds shares in both Telecom Namibia and MTC. Although the NaCC approved the merger, the deal can only be sealed once the Communications Authority of Namibia (CRAN) approves it.
The NaCC received a merger notification on 9 January 2012 on the proposed acquisition of Powercom, trading as Leo, by Telecom Namibia. Powercom is the second licensed cellular company and is partnership with NamPower and Telenor, a Norwegian company.