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Publication

CAPE TIMES BUSINESS REPORT

Page

15

Date

Fri 06 Oct 2017

AVE (ZAR)

26793.31

Vodacom oncomeback trailafterWednesdaySisekoNjobeni

LISTEDmobile network operatorVodacomrebounded yesterdayafter falling onWednesday,following reports that the Com-petition Commissionwas inves-tigating the company four-yearcontract to be the sole providerof mobile telecommunicationservicesto the government.

The shares rose 2.17 percentto R154.65on the JSEafterfalling more than 3 percent onWednesday, following the com-mission's announcement.

Telecommunications industryexper t, Spiwe Chireka, said theshare price recovered mainlybecause of Vodacom's responseto the probe.

"I think the share price hasrecovered because there is anelement of trust. The share-holders have taken to heart thecompany 's explanation, " saidChireka.

The stock took a beatingafter the commission said thecontract constituted an exclu-sionary abuse of dominance byVodacom in contravention ofthe Competition Act. The an-ti-trust body said it had reason-able grounds to suspect thatthe exclusive contracts mightconstitute exclusionary abuseof dominance by Vodacom.

Vodacom chief executiveShameel Joosub said the com-

Vodacomshareprice,rand Jul5 - Oct5

Source:Bloomberg

pany was fully co-operatingwith the commission. Joosubsaid the company was confi-dent that it had followed dueprocess.

"None of the pricing struc-tures put forward to NationalTreasury was based on an ex-clusive provider award basis, orany restrictive minimum com-mitments, " he said.

Paul Coetser, Head of Compe-tition Law at, Werksmans Attor-neys yesterday said the shareprice shook on the announce-ment of the commencement ofan investigation instead of anoutcome.

Coetser said investors actedon the announcement withoutnecessarily understanding thenuances of the commission 'sprocesses.

An employeecleanscellphoneaccessoriesat a Vodacomshop in Johannesburg.Vodacomsharesrecoveredyesterdayafter taking a knockonWednesdayover allegedcompetitiontransgressions.

They assume that an investi-gation means that a convictionand a large fine are inevitable,which may not necessarily bethe case," Coetser said. "Thisoften leads to a prematuresell-off or over-reaction in themarket, with large gyrations inthe trading price of the sharesof the company being investi-gated. This is sometimes calleda "false market' in which invest-

ors can lose a lot of money."Coetser said that if the com-

mission found the agreementto be anti-competitiv e, thematter would be referred tothe Competition Tribunal fora full scale litigation process."At the Tribunal, Vodacom willhave the oppor tunity to defenditself. If the Tribunal ultimatelyfinds Vodacom guilty, it has thepower to impose an administr a-

tive penalty and to declare theagreement void," said Coetser.

The probe has brought intofocus the extent to which exclu-sive contracts comply with thecompetition legislation. Coetsersaid it was not impossible toseal an exclusive contract with-out contravening competitionlaws.

"However, it would dependentirely on the market circum-

PHOTO:REUTERS

stances, for instance whetherthe parties to the agreementare dominant, the duration ofthe agreement, whether it canbe terminated on short notice,and whether the other marketplayers have accessto a signifi-cant portion of the remainingcustomers in the market. All ofthis will have to be consideredin the course of the investiga-tion," he said.