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IoT & Smart Cities

Vodacom & IoT.nxt Deal Moves Forward

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South Africa's Competition Commission has approved the proposed merger whereby Vodacom intends to acquire a controlling stake in IoT.nxt, with conditions.

In May, Vodacom Group announced it was buying a 51% stake in the Pretoria-based Internet of Things (IoT) solutions provider as a way to accelerate its IoT strategy and transform its dedicated IoT business unit. At the time, Vodacom said the deal would allow it to take advantage of what IoT.nxt has already been doing in the IoT market and combine this with the IoT activities of Vodacom Business.

How much the South African mobile operator is paying for the stake in IoT.nxt has not been disclosed, but Vodacom has identified IoT as a key strategic growth area for the Group.

IoT.nxt provides hardware -- in the form of smart sensors and IoT gateways -- and software which is used to provide IoT solutions through an end-to-end platform. The combination of its protocol-agnostic information layer and flexible architecture allows for rapid solution development, it claims. Vodacom expects the use of this technology in its basestations to produce significant energy savings.

"The Commission found that Vodacom may have the incentive to bundle their offerings of voice, data and IoT services post-merger to the exclusion of non-vertically integrated rivals. This concern was also raised by other market participants whom the Commission engaged with during its investigation," the Commission said in a statement.

To address these concerns, the Commission and the merging parties have agreed to some conditions to remedy the situation. This includes a stipulation that IoT.nxt's products and services will continue to be made available to all customers on non-discriminatory terms post-merger. Specifically, IoT.nxt will not supply its products and services exclusively to Vodacom post-merger.

In addition, IoT.nxt's customers will not be required to buy connectivity services from Vodacom when procuring gateways, edge platforms and/or cloud orchestration products and services from IoT.nxt post-merger.

The Commission, however, believes the proposed transaction "does not raise any public interest concerns".

Funding partner Talent10 provided the initial funding for the establishment of IoT.nxt in late 2015 and invested a further R100 million (US$6.5 million) in 2017 for the opening of its European office in The Hague.

— The Staff, Connecting Africa

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