MTN accused of anti-competitive behaviour

Huge group oppose Competition Commission’s recommendation to allow MTN to purchase iTalk

The Competition Commission has recommended that the proposed transaction by MTN to
purchase the remaining 59% of iTalk Cellular be approved.

Anton Potgieter, Executive Chairman of the Huge Group, is vehemently apposed to the
transaction and is determined to stop in from going through.

“We certainly plan to vehemently oppose this transaction and we can now apply to take our
arguments before the Competition Tribunal and, if we have to, the Competition Appeal Court.”

“Over the past months we have accumulated and prepared extensive evidence supporting the fact
that MTN’s bid is highly anti-competitive, and will have the effect of a substantial lessening of
competition by removing an effective competitor from the market.”

Huge Group submitted an application to the Competition Commission earlier this year to purchase
the 59% of iTalk under dispute. Huge’s application was approved unconditionally. Shortly after
this approval was given, MTN decided to act on its right to purchase these shares.

“The fact that MTN originally waived their pre-emptive rights and then did a u-turn on that
decision, shows that they subsequently realised the impact a new, customer-orientated competitor
with control of iTalk could make in the currently, highly inert and oligopolistic GSM handset
market,” he says.

“MTN have already delayed the transaction by 15 months and we believe that they will continue to
try and delay it even further in a bid to prejudice the business.”

According to Potgieter, MTN is paying more than double the price of any other transaction of this
nature - an amount of around R363-million cash, which pushes iTalk’s enterprise value to roughly
R615-million.

Considering the number of current subscribers in the iTalk database this equates to around
R4,700 per subscriber.

“MTN is paying more than 100% premium over past transactions to purportedly gain the iTalk
subscriber base.”

“If MTN’s bid is approved, it will indeed be a very sad day for the South African consumer,” says
Potgieter.

“Less competition means less choice for the consumer, and essentially the service providers will
be allowed to continue to charge exorbitant rates for their ‘services’ unhindered. We will continue
to stand firm in our arguments and are confident that the Tribunal will agree with our reasoning
and will block MTN’s bid,” he concludes.

By: Nic Simmonds