Question 1: (20 Marks)
Read the extract below and conduct your own research about MTN and Telkom business deal, to be able to answer the question below:
MTN South Africa was discussing purchasing smaller competitor Telkom in a stock or cash- and-shares transaction that would propel MTN ahead of market leader Vodacom Group. The prospective $1 billion agreement would have given MTN access to Telkom’s fibre infrastructure, which is considered essential for growing 4G and 5G mobile services. However, several experts were sceptical that South Africa’s competition regulator would sanction a merger establishing a telecoms duopoly in Africa’s most sophisticated country. Telkom charges lower pricing than MTN, which would have allowed customers to purchase low-cost or high-cost products.
• Discuss whether MTN’s acquisition of Telkom would have been ethical for customers. In your answer include your thoughts on whether the merger would have benefited the organization or society in terms of pricing and choice.
Answers to Above Question on Business Ethics
It is important to identify the impact of Mtn’s acquisition of Telkom in order to conclude whether the merger could lead to ethical impact on customers. From the positive point of view, the merger would provide significant benefit to MTN, as it would get access to the huge fibre infrastructure of Telkom and there can be significant cost savings possible to the company in expanding its 4G and 5G mobile services. However, the negative aspect from the point of view of customers is that the merger would result in a duopoly in the South African Telecom industry, as there would be MTN and Vodacom that would dominate the market and may charge any prices for the services from the customers. This would leave the customers with no options in availing low cost services for communication.
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