Two mobile carrier companies in South Africa, Cell C and MTN, have concluded an extended roaming agreement, which appears to be an expansion of a previous roaming agreement between the companies, concluded in May 2018. In terms of the first agreement, MTN provided Cell C customers with 2G, 3G and 4G roaming services on MTN's network in select areas across the country where Cell C had chosen to purchase coverage rather than establish its own infrastructure (mainly outside main metropolitan areas). In terms of the new agreement concluded on 18 November 2019, access will be expanded to enable Cell C customers to roam on MTN's data network nationally.
Roaming agreements enable smaller operators or new entrants to offer services to their subscribers in areas where they lack their own network infrastructure, thus giving them the ability to compete with the large operators. Agreements of this nature are common in South Africa, as well as around the world. In fact, the Competition Commission's Data Services Market Inquiry remarked in its provisional findings report (published on 24 April 2019) that "national roaming is an important tool to facilitate entry of new operators and accelerate effective competition".
The conclusion of the expanded roaming agreement will allow Cell C to offer national 4G coverage to customers through MTN's network, without having to incur high costs in developing its own national network. Ultimately, this enables Cell C to enhance its service offering and competitive position vis-à-vis the larger networks.
Cell C has stated publicly that both parties will maintain their respective spectrums and each party will use its own frequencies. Cell C has also indicated that it will still have all its licences and control its core network, transmission, billing system and subscriber management. MTN and Cell C will remain independent companies following the conclusion of the agreement. In order for the conclusion of the roaming agreement to have constituted a merger for competition law purposes, one party would need to acquire control over the business or productive assets of the other. The current roaming arrangement between Cell C and MTN does not appear to involve an acquisition of control but merely the provision of roaming services.
In contrast, in 2015, MTN and Telkom attempted to conclude a network management services agreement and reciprocal roaming agreements, which would effectively let each party roam on the other's mobile network. This gave rise to an acquisition of control by MTN as MTN would have taken over the financial and operational responsibility for the roll out and operation of Telkom's radio access network (including Telkom's spectrum capacity). The Competition Commission raised concerns with that transaction, which was ultimately abandoned by MTN and Telkom.
In South Africa, Vodacom and MTN have by far the largest network coverage nationally. Accordingly, all other network operators who seek national coverage (or partial coverage in areas where they lack their own infrastructure) make use of roaming arrangements with MTN and Vodacom. The conclusion of the Cell C MTN agreement therefore does not necessarily signal an unfair advantage of the two operators compared with competitors. An advantage over competitors could arise depending on the specific terms of the agreement and quality of service that an operator can provide. For example, if MTN is able to offer Cell C more competitive roaming rates or higher quality network service compared to another provider of roaming services, this would benefit Cell C, but this is not necessarily an unfair advantage or anticompetitive.
The expansion of the roaming agreement between Cell C and MTN brings it in line with the current roaming agreement between Vodacom and Telkom, which was concluded in November 2018 to allow Telkom customers to roam on Vodacom's LTE network nationally. Just as Telkom's customers can make use of Vodacom's data network nationally, the conclusion of the new agreement between MTN and Cell C, means that Cell C's customers will be able to use MTN's 2G, 3G and 4G network across the country.