Huge takes on MTN

AltX-listed Huge Group has reiterated the position it took recently at its annual results presentation, saying it will oppose MTN's application to buy iTalk Cellular by making formal submissions to the Competition Commission.

The company's shares had fallen 5.4% to 330c by early afternoon after MTN made its intentions to buy iTalk public late on Friday, seemingly scuppering Huge's acquisition thereof.

Despite this, Huge does not believe that its potential purchase of iTalk is dead in the water. It would only be so if the Competition authorities gave MTN's purchase thereof the thumbs up, the company says.

"For now it is business as usual - all that this means is that Huge Group will effectively have one further hoop to jump through in its effort to acquire a controlling interest in iTalk," Huge said in a statement.

Huge said MTN had originally waived its pre-emptive right to buy the balance of the 59% of the shares held by the Bebinchand Seevnarayan Trust, which is why it had proceeded with its offer of R511m.

But, MTN later changed its mind about exercising this pre-emptive.

However, Huge's offer remains on the table.

Huge says the MTN deal "substantially lessens competition in SA's mobile telecommunications market".

This is not the only transaction that MTN faces possible opposition to.

It also announced last week that it would buy Verizon Business South Africa. But, some parties, among them Dimension Data's Internet Solutions, said they were likely to oppose the transaction with the competition authorities.

Once a merging party has announced a transaction and files for competition approval, there's a window of opportunity for opposing parties to submit any complaints or additional information to help the Commission make its recommendation.

While the biggest mobile operator in this market Vodacom has been buying out its independent service providers and has obtained approval to do so along the way, the last transaction, the purchase of Global Telematics, saw it issued with a stern warning from the Competition Tribunal for allegedly withholding information from it and the Competition Commission.

The tribunal also warned that if it had been able to look at all six deals in as a single one, it would have been vulnerable to prohibition.

It remains to be seen how vociferous Huge's argument against MTN's purchase of iTalk will be and whether the authorities will agree with it that the deal is an anti-competitive one.

But, if anything, it was clear from listening to financial director James Herbst at the results a few weeks ago, that it is up for a fight and is preparing to do battle.

By: Belinda Anderson