Telecom could monopolise industry

If Telecom Namibia should acquire shares in Leo, there will be little private sector involvement in Namibia’s telecommunications industry, says Klaus Schade, an independent economist.
He says Telecom would  benefit from such a transaction by having access to modern technology used by Leo, upgrade its own mobile phone services and can enter the lucrative market.
“However, all fixed line and mobile phone operators will be majority-owned by Namibia Post and Telecommunication Holdings, which is 100% government owned. The new set-up could have a negative impact on competition,” Schade told the Economist.
He added that at first, consumers might benefit from more competition since Telecom will try to increase its market share, however, since all operators are majority owned by one mother company, it might influence the degree of competition between them in the medium term.
“Sell Leo to the private sector and offer shares in the other operators also to the Namibian private sector. There is no need for government to own mobilephone companies,” said Schade.
In June last year, Telecel Globe announced that it is finalising an agreement to sell its subsidiary, PowerCom – the Leo holding company, to Investec and Nedbank.
“The sale process was initiated by the previous owner Telecel Globe Ltd and started in the last quarter 2010. The sale involves Investec Bank Ltd and Nedbank Capital, a division of Nedbank Ltd, acting through a Namibian company which will acquire all shares in PowerCom (PTY) Ltd. This change in ownership has been discussed with our line Ministry of Information and Communications Technology and CRAN (Communications Regulatory Authority of Namibia) and is subject to approval from those authorities which is expected soon,” said Stanley Similo, Chief HR, Corporate and Regulatory Affairs Officer at Leo, at the time.
The company was acquired by two banks, Investec and Nedbank for $60 million in June 2011.
Telecom Namibia agreed to purchase 100% of Powercom in December.
The Communications Regulatory Authority of Namibia (CRAN) warned that the take-over poses the danger of a monopoly. Namibia Post and Telecommunications Holdings (NPTH) is a 66% shareholder of MTC and is the parent company of Telecom.
The Namibian Competition Commission (NaCC) this week held a stakeholder conference into the proposed acquisition of PowerCom behind closed doors.
According to Lucius Murorua, chairperson of the competition commission, the NaCC has already exercised due diligence on the proposed merger in order for it to be able to adjudicate on the matter.
“This being a high profile merger, with the commission having received several concerns and queries from the public, the commission thought it necessary to hold a stakeholders conference so as to give merging parties a chance to address their concerns on the proposed merger,” said Murorua.
He said the commission will take note of the concerns raised at the stakeholder conference and will use these concerns when considering whether to approve the merger or not.
Discussions at the stakeholder conference, which was held on Tuesday this week, centred around the benefits such a merger will present for the customer as well as competition within the local telecoms industry.
Some of the benefits that could be derived from Telecom’s acquisition of Leo include: an increase in Telecom’s market share, revenue generated will stay in the country, Telecom will be able to build its own GSM facilities and the failure of PowerCom will weaken the competitive landscape, those in favour of the merger say.