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A Quiet Merger Between Rain & Vodacom Is Brewing A Telco War In SA


October 14, 2020

Africa’s foremost commercial 5G provider and Africa’s strongest brand are believed to have quietly agreed on a merger. The seemingly private agreements between African Rainbow Capital-owned Rain and Midrand-based mobile service provider Vodacom is heating up South Africa’s telecoms space.

Telecom Infrastructure

The deal between the 2 companies appears to have been revealed by Telkom SA, South Africa’s third-largest telco. It claims that Rain and Vodacom have merged their telecom infrastructure. Being that Rain provides high-speed internet connectivity, Vodacom might now be using its spectrum and its radio access network.

Rain is a fierce competitor in the retail 4G and 5G data markets in South Africa. With access to Vodacom’s tower sites to build more on its network infrastructure, there is every reason to believe that the data-only service provider would become even fiercer.

The possible results of the merger between the two firms are unmistakenly a threat to Telkom SA and other mobile carriers in the country. The details of the deal are not yet public, but competitors have lamented over the agreement. Reportedly, the merger happened behind closed doors, which is why Telkom is advocating for the transaction to be scrutinized.

In defense, Rain says its provision of non-exclusive roaming services to Vodacom has already been scrutinized and gotten the approval of the Competition Commission and Independent Communications Authority of South Africa (ICASA).

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Nevertheless, this isn’t the first time a deal between Rain and Vodacom is surfacing. In 2018, both companies entered into a national roaming agreement. In Cell C’s complaint at the time, the development would give Vodacom a huge advantage over smaller players, possibly distorting the industry in the market leader’s favor.

Raining Troubles?

Actually, this transaction was completed 2 years ago, when Rain was still known as Wireless Business Solutions. Though Cell notified ICASA about the deal’s implications, the watchdog determined that no spectrum sharing was technically happening between the parties. As such, ICASA did not interfere in the transactions.

However, now that the issue resurfaced, it appears spectrum sharing is still a considerable concern thanks to Telkom. Telkom took the case to the country’s Competition Tribunal, seeking to have the spectrum arrangements between Vodacom and Rain declared a merger and, therefore, notifiable in terms of the Competition Act.

This dispute only just surfaced, so there is still much time to see how it all pans out. But on the Rain side of the conundrum, it marks the second time the service provider is getting into regulatory-related troubles.

About a week ago, the operator got a lightning rod of disgruntled users who complained regarding the service it claims to provide. This dissatisfaction garnered the interest of the country’s Advertising Regulatory Board, which forced Rain to change its “misleading” adverts.

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