The Commission considered an application for the authorization of the proposed acquisition of assets belonging to Open Connect Limited (OCL) by Telekom Networks Malawi plc (TNM).
The transaction involved TNM acquiring OCL’s fiber network, data center, network equipment, vehicles, and enterprise contracts for a consideration of MK23.5 Billion. Active employees of OCL will also be transferred to TNM. Following completion, the transaction will result in the vertical integration of OCL’s wholesale infrastructure with TNM’s downstream retail operations.
Pursuant to Section 35 and Section 37 of the CFTA, this transaction constituted a merger requiring prior authorization under Section 43 of the Act. Therefore, the Commission instituted investigations to assess the transaction’s impact on competition and the economy of Malawi.
The Commission found that the proposed transaction represents a vertical merger combining an upstream wholesale infrastructure provider with a downstream retail telecommunication operator. While horizontal concentration remains unchanged, the merger alters operational dynamics by placing essential fiber assets under the control of a direct downstream competitor. This introduces key risks of input foreclosure, non-price discrimination, loss of OCL’s neutral open-access framework, and potential misuse of competitors’ traffic data. However, the integration generates operational efficiencies, lowers distribution costs, and secures needed capital to upgrade failing network infrastructure.
The Commission found that the most critical public interest consideration is saving a failing firm. OCL is facing severe financial distress, negative working capital, and operational strain that threatens the maintenance of critical national telecommunications infrastructure. The acquisition provides essential recapitalization, prevents asset collapse, preserves approximately 40 jobs, and supports digital infrastructure development without imposing adverse fiscal burdens on the state.
Following deliberations, the Commission made the following Orders:
- TNM should maintain the open access and neutrality features of the wholesale fibre network by operating wholesale and retail functions as separate entities with independent board oversight.
- TNM should not engage in discriminatory pricing or anti-competitive conduct toward competitor operators relying on the acquired wholesale network.
- TNM should absorb and maintain OCL’s current employment levels.
- TNM should remain under regulatory surveillance by the Commission for a period of three years under a formal Memorandum of Understanding (MoU) to monitor compliance.