1 December 2014 by Cliffe Dekker Hofmeyr Competition Matters

Three transactions approved as part of the move for Nashua Mobile to exit the mobile telecommunication services market

Nashua Mobile Proprietary Limited (Nashua Mobile) is effectively exiting the market for the retailing of mobile telecommunication services to corporate and consumer subscribers and will no longer be operating as a service provider in the telecommunications industry. The apparent reason for this is due to changes in the market that led to the service provider business model becoming obsolete and inefficient.

The Competition Tribunal has approved three separate transactions which respectively result in:

  • Altech Autopage Cellular Proprietary Limited (Altech Autopage) acquiring Nashua Mobile's Cell C subscriber base and certain franchisees and dealers of Nashua Mobile;
  • Vodacom Proprietary Limited acquiring Nashua Mobile's Vodacom subscriber base; and
  • Mobile Telephone Networks Proprietary Limited (MTN) acquiring Nashua Mobile's MTN subscriber base.

These transactions are only three of several interrelated transaction that will result in Nashua Mobile exiting the market.

Nashua Mobile acknowledged the difficulties it faces in the market, but stated that it would be able to continue operating in the market (albeit not in the long-term) and that its exit from the market is largely motivated by the fact that it would, at this stage, still be in a position to offer favourable severance packages to its employees and some returns to shareholders.

Nashua Mobile made substantial commitments to minimise the effects on employment, including:

  • undertaking to redeploy affected employees within its holding group (especially unskilled employees that are viewed as most vulnerable and least likely to find alternative employment);
  • offering favourable severance packages;
  • establishing support structures to provide employees with psychological and financial counselling;
  • assistance in updating their CVs;
  • having their CVs circulated within Nashua Mobile's holding group and being afforded preferential consideration in the event of vacancies arising; and
  • reference letters.

This decision is indicative of the steps that merging parties are expected to implement in the event of the retrenchment of employees as a result of a merger, where a moratorium on merger specific retrenchments cannot be applied.

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