JOHANNESBURG (Reuters) - South Africa's Telkom on Monday ended talks with MTN after the Competition Commission said it was against a proposed deal to give Africa's largest mobile operator greater access to the fixed-line operator's network.
Mobile operators in Africa's most advanced economy are scrambling to access more radio spectrum because their networks have to deal with an increasing number of phone users and the rapid growth of data consumption.
Telkom and MTN have been in talks since February to extend their roaming agreement to include the outsourcing of Telkom's radio access network but decided to end their negotiations because of the Competition Commission's opposition to it, the fixed line operator said in a statement.
The Competition Commission said it would ask the Competition Tribunal to prohibit the deal as it was "likely to substantially prevent or lessen competition in the mobile services market".
Such a deal would limit the growth of Telkom's own mobile business and independently compete against market leaders MTN and Vodacom, the Commission said in a statement.
"I am satisfied with our legal and economic analysis of this proposed merger, and therefore confident that our recommendation to block it is sound. The decision protects competition in telecommunications, a very important market for our economy now and in the future," said Commissioner Tembinkosi Bonakele.
In June, MTN's rival Vodacom got the Commission's blessing to buy Neotel, South Africa's other fixed line operator, for 7 billion rand ($543 million) but under strict conditions that Vodacom won't use Neotel’s spectrum to sell mobile services to any of its customers for a period of 2 years. [ID:nL8N0ZG4P4]
Shares in Telkom were 0.77 percent lower at 63.53 rand by 1133 GMT, while those of MTN were flat.
($1 = 12.8870 rand)