The Competition Tribunal ruled against Vodacom’s proposed acquisition of Maziv because the merger would permanently harm competition in SA’s telecom sector and negatively affect millions of consumers who rely on affordable internet services.
The reasons for the decision, announced on Friday after a detailed review spanning nearly two years, follows concerns raised by the Competition Commission and various industry stakeholders. The tribunal said the merger’s anticompetitive effects would outweigh any potential public interest benefits.
The tribunal initially rejected the transaction in October 2024.
The tribunal concluded that Vodacom’s proposed acquisition of a 30%-40% stake in Maziv, the parent company of fibre giants Dark Fibre Africa and Vumatel, would create a dominant entity capable of stifling competition across several markets.
These markets include fibre-to-the-home, fibre-to-the-business and mobile backhaul services.
According to the tribunal, the combined entity could restrict rivals’ access to critical fibre infrastructure, disadvantaging smaller internet service providers and mobile network operators. It warned that reduced competition could lead to higher data costs and slower innovation, ultimately harming millions of SA consumers.
Vodacom had committed to investing R14bn in SA’s digital infrastructure, including rolling out fibre to 1-million homes in low-income areas and creating 10,000 jobs. However, the tribunal found these commitments were not merger-specific and are likely to occur regardless of the transaction due to existing market dynamics and regulatory obligations.
The tribunal said the public interest benefits claimed by the merger parties were substantially lower than advertised and did not justify the anticompetitive risks posed by the deal.
The merger has been a contentious issue, with trade, industry & competition minister Parks Tau publicly supporting the deal on public interest grounds. Tau argued that the transaction would boost investment in fibre and mobile connectivity, aligning with SA’s priorities for industrialisation and job creation.
However, his stance had divided political parties, with some arguing that the merger would undermine competition and harm consumers.
To address competition concerns, Vodacom had offered remedies such as divesting certain fibre-to-the-home assets and implementing behavioural conditions to prevent anticompetitive practices. However, the tribunal deemed these measures inadequate, citing their complexity and lack of enforceability. The watchdog also said the proposed remedies failed to address the permanent loss of future competition and the structural changes to the market that the merger would bring.
In November, Vodacom CEO Shameel Joosub said the company was committed to the Maziv deal, stating that it was essential for accelerating SA’s digital transformation. Joosub said Vodacom had no alternative plans to expand its fibre network on the same scale without the merger.
He argued that the deal was crucial for addressing the digital divide in underserved areas and that the tribunal’s decision would delay these efforts.
Vodacom and Remgro will head to court in July in a final bid to gain approval for the proposed merger. The Competition Appeal Court informed the parties on March 6 that their appeal will be heard on July 22-24.
With Mudiwa Gavaza
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