COMPETITION TRIBUNAL
REPUBLIC OF SOUTH AFRICA
Case No: 34/LM/May05
In the large merger between:
Lanum Securities SA
and
3C Telecommunications (Pty) Ltd
Reasons for Decision
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APPROVAL
On 25 May 2005 the Competition Tribunal issued a Merger Clearance Certificate
approving the merger between the 3C Telecommunications (Pty) Ltd and Lanum
Securities SA in terms of section 16(2)(a). The reasons for the approval of the
merger appear below.
The Parties
1. The acquiring firm is Lanum Securities S.A. (“Lanum”). This is a new
company that has henceforth not traded. It is controlled by Rashid
Engineering which is in turn owned by a Saudi Arabian national. Lanum
has no subsidiaries in South Africa.
2. The primary target firm is 3C Telecommuncations (Pty) Ltd (“3C”), jointly
controlled by CellSaf (Pty) Ltd (as to 40%) and Oger Telecom (South Africa)
(Pty) Ltd (as to 60%). Oger Telecom is in turn controlled by Saudi Oger Ltd,
a company registered in Saudi Arabia. CellSAf comprises a consortium of
historically disadvantaged shareholders. 3C owns and controls one
company only, Cell C (Pty) Ltd (“Cell C”), the third mobile network operator
in South Africa.
3. Other subsidiaries of Cell C include Cell C Service Provider Company (Pty)
Ltd which provides sales, distribution and retail marketing exclusively for
Cell C. Secondly, Cell C Property Holdings Company (Pty) Ltd which holds
properties on behalf of Cell C.
The Merger Transaction
4. Lanum will acquire 15% of the shares in 3C from Cellsaf. It will therefore
postmerger be in joint control of 3C, together with Oger Telecom (60%)
and CellSAf (25%).
5. Therefore essentially Lanum will become a new joint controlling shareholder
while CellSAf will dilute its shareholding in 3C.
Rationale for the Transaction
f. The parties aver that this transaction entails significant foreign
investment in the local telecommunications industry.
7. Security for the funding has ultimately been provided by Saudi Oger by way
of guarantees, and CellSAf incurred certain security obligations in relation
to the funding and its other borrowings. The rationale for this merger
transaction is to settle all of CellSAf’s loan funding and release it from the
security obligations it incurred in relation to its borrowings .
8. This will allow CellSAf’s shareholding in 3C, which is presently entirely
encumbered in favour of the funders of its shareholding, to be held debt
free.
The relevant product market
9. Rashid Engineering provides architectural and engineering
consulting services in the Kingdom of Saudi Arabia. Neither it nor its
shareholders has any interests in telecommuncations anywhere
worldwide.
10. 3C is involved in the provision of cellular telephone through its subsidiary,
Cell C. Cell C has been providing mobile telephony services throughout
South Africa since it was awarded a licence in 2001. CellSAf is an
investment holding company with interests in 3C. Oger Telecom also has
interests in the mobile telecommunications market through Cell C.
11. Saudi Oger is involved in telecommunications, shipping, transportation, and
construction. It is also involved in some architectural and construction
projects and is regarded as a reputable contractor for prestigious
construction projects in the Middle East, Africa and Europe.
12. There is therefore no product overlap.
Conclusion
We conclude that the merger will not lead to a substantial lessening or prevention
of competition.
The Tribunal therefore approves the transaction unconditionally. There are no
public interest concerns which would alter this conclusion.
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1 June 2005
N. Manoim Date
Concurring: M. Moerane, D. Lewis
For the merging parties: H. Irvine, Deneys Reitz Attorneys
For the Commission: H. Ratshisusu, Competition Commission