Telkom has been making a play for IT services company Business Connection (BCX) for a while now, but the fixed-line and mobile operator had to jump through a number of hoops to get the official ball rolling, one of which was approval.

Late yesterday South Africa’s Competition Commission recommended the proposed acquisition be approved, but did say that it will only be on the grounds of certain conditions, which need to be met by both parties.

“The Commission has recommended to the Competition Tribunal (Tribunal) that the large merger whereby Telkom SA SOC Limited (Telkom) intends to acquire Business Connexion Group Limited (BCX) be approved, with conditions,” the Commission said in a statement.

It added that BCX will become a wholly-owned subsidiary of Telkom and needs to delist from the Johannesburg Stock Exchange (JSE) as soon as the merger is done.

On the other conditions for the acquisition, Telkom was told that it will need to:

• Ensure that the prices for wholesale leased lines are based on actual lines utilised and priced at the non-discriminatory transfer price for common components.
• Ensure that the prices for the other services and/or components included in the bundle are based on actual costs incurred.
• Ensure that it does not set prices for its bundled offerings using wholesale leased lines at levels which are less than the sum of the costs of components in the bundle. In other words, the principle is that the prices for wholesale leased lines included in the bundle must exceed the cost applied in internal pricing and the revenues generated from the bundled offering must exceed the costs associated with providing the bundle plus a positive margin
• Ensure that when providing any bundled offering which includes wholesale leased line, the price complements for each individual service included in the bundle is clearly reflected in the overall price for the bundle.

“We believe the proposed acquisition will assist Telkom with its strategy to grow beyond its core business of connectivity by expanding into ICT services. This will enable our business to further enhance and grow its existing offerings, while at the same time providing scale in IT services. It will also help to reinforce the company’s core connectivity business and enhance Telkom’s convergence strategy,” said Sipho Maseko, Telkom Group Chief Executive Officer.