Huge Group PR - iTalk Update


Huge Group PR - iTalk Update

By Huge Group - Thursday, December 11, 2008

 

 
Huge Group excluded from iTalk competition tribunal hearing
11 December 2008
 
 
The Competition Tribunal of South Africa has denied the Huge Group leave to intervene in the hearing of the MTN-iTalk merger.
 
The Huge Group made a bid to purchase 59% of iTalk from the Bebinchand Seevnaryan Trust in December 2007 and subsequently received competition commission approval for the transaction, but MTN, the owner of the other 41% of iTalk, then exercised their pre-emptive shareholders rights over the Trust's shares in May 2008.
 
The Huge Group has since maintained that MTN's assumption of control of its service provider iTalk, commonly termed "vertical integration", will represent a substantial lessening of competition in the cellular handset market.
 
The Huge Group's executive chairman Anton Potgieter comments, "We are obviously extremely disappointed with the Tribunal's stance on this, as we feel we could have added significantly to their assessment of this merger, and its potential competition foreclosures, and we were certainly not expecting our concerns to be summarily dismissed."
 
With regard to acquiring iTalk as an asset for the Huge Group however, Potgieter feels that the Tribunal's ruling may in fact be a blessing in disguise.  "The price agreed for iTalk was negotiated back in December 2007 and since then the landscape has changed dramatically.  The markets at present are offering a lot of value and the prices of most assets have fallen sharply since last year.  By current standards our original offer for iTalk is looking very expensive and on top of this is the fact that iTalk's subscriber base has fallen over 18% since last year.  Though we were excited at the prospect of launching innovative consumer offerings through iTalk, I think our shareholders would now expect us to seriously reconsider concluding the deal should the Tribunal prohibit the merger."
 
When asked about the time and energy invested in iTalk, Potgieter insists that Huge remains convinced that, "we have 'done the right thing' in opposing this merger on competition grounds, and we still firmly believe that its conclusion will lessen competition in SA cellular handset provision, to the detriment of the SA consumer.  However on the other hand, this matter has dragged on for nearly a year, and the Tribunal's decision is also now a weight off our minds, and will free us to move forward with other areas of the business and our further expansion plans for the group in 2009."
 

Further Information:
Anton Potgieter
Chief Executive Officer
011-603-6000
082-855-0505