Remgro, the investment holding company chaired by Johann Rupert, is confident that the Competition Tribunal will approve the merger between telecom business Community Investment Ventures Holdings (CIVH) and the fibre businesses of Vodacom, SA’s biggest mobile phone operator.
This comes after the Competition Commission on Tuesday recommended that the deal involving CIVH’s fibre units, Vumatel and Dark Fibre Africa (DFA), which were folded into a new holding company called Maziv, be blocked as Vodacom aims to take a 30% stake in Maziv, worth an estimated R13bn, with the option of raising that to 40%.
Remgro said on Thursday that it believes if the Competition Tribunal, which has the final say on antitrust-related matters, approves the deal, it will benefit South African consumers and the domestic economy.
“The investment will enable Maziv to extend fibre infrastructure to new households within previously underserved, lower income areas, create new jobs and facilitate the creation of small to medium enterprises through a fund formed specifically for this purpose,” it added.
The transaction, announced in November 2021, has received approval from SA’s telecom regulator.
The Competition Commission said on Tuesday it believes the deal is “likely to substantially prevent or lessen competition in several markets and that the conditions offered do not fully address the resultant harm to competition”.
The competition body argues that 5G fixed wireless access (FWA) and fibre compete in the same market and that consumers stand to benefit from increasing competitive rivalry between FWA and fibre. Vodacom is SA’s largest mobile provider and a big player in 5G, while Maziv is already the largest fibre-to-the-home player.
“The proposed merger will result in the loss of direct competition between Vodacom and Maziv in the areas where both Vodacom and Maziv have deployed fibre,” it said.
“The commission’s investigation has shown that fibre players tend to reduce prices in areas where more than one fibre network provider has deployed fibre. This price competition is lost with the merger,” said the authority.
Vodacom said it is “surprised and disappointed” with the commission’s recommendation given that both Vodacom and CIVH have endeavoured to thoroughly address competition-related concerns through a list of remedies and public interest commitments put forward to the commission.
Had the commission, which typically investigates matters such as proposed mergers, recommended the deal, the tribunal would usually follow suit. Due to the prohibition, however, the merging parties now have the right to appeal to the tribunal.
If that fails, there is still the Competition Appeal Court (CAC), which considers appeals or reviews against tribunal decisions.
With Mudiwa Gavaza
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