Telkom's bid for BCX blocked

ADSL South Africa (Broadband South Africa), 4 July 2007

The Competition Tribunal ruled in favour of sanity earlier last week by ruling against Telkom’s planned R2.4 billion purchase of Business Connexion (BCX).

The news was welcomed by many in- and outside the telecoms sector and can be deemed as a victory for the average Joe like you and me. Parties who opposed the deal include the SA SMME Forum, Internet Solutions (IS), The Internet Service Providers’ Association (ISPA), Dimension Data and others.

Some of their responses to the news:

• Internet Solutions (IS) - “We're now going into an environment which is competitive and parties shouldn't be able to use monopolies they have had previously to produce results” (BCX emerges from merger ‘cloud,’ Samantha Perry, ITWEB, 29 June 2007). This is according to Hillel Schrock, IS Business Development Director. In other words, Telkom for one must not be allowed to get a firm grasp on the South African telecoms sector again (like in the past).

• The Internet Service Providers’ Association (ISPA) - Greg Massel, Co-Chairman of ISPA said: “This decision marks a victory for both ISPA's members and for consumers” (BCX emerges from merger ‘cloud,’ Samantha Perry, ITWEB, 29 June 2007).

He added: “As both the supplier of key services to ISPs and a direct competitor in the Internet market, Telkom has exploited its dominant position for more than a decade. Anti-competitive practices such as margin squeezing and vertical bundling have resulted in high prices for consumers and made it extremely difficult for independent ISPs to compete fairly” (BCX emerges from merger ‘cloud,’ Samantha Perry, ITWEB, 29 June 2007).

In other words, Telkom must not be allowed to exploit its dominant position again because it only leads to high prices for consumers and derails healthy competition.

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