Vodacom may appeal against the Competition Tribunal’s decision on Tuesday to block its merger with Remgro’s fibre business that could spell the end of consolidation in the sector and profoundly influence the structural dynamics of SA’s telecommunications landscape.
The proposed merger would have seen Vodacom take a 30% stake in Maziv, which houses Remgro’s fibre units Vumatel and Dark Fibre Africa — together worth an estimated R13bn — with the option of increasing that to 40%. Besides stymying the mobile operator’s plans to substantially increase its fibre footprint nationwide, the tribunal also puts the brakes on Maziv gaining access to billions of rand to continue rolling out fibre infrastructure, especially into lower-income areas.
Both companies are awaiting the tribunal’s detailed reasons before taking the next step. For Vodacom that “may include an appeal in the Competition Appeal Court”. The companies had been banking on the tribunal’s approval after agreeing to a range of conditions when the Competition Commission recommended against the deal a year ago.
“I am deeply surprised and disappointed by the tribunal’s decision,” Vodacom CEO Shameel Joosub, said. “SA desperately needs additional significant investment, especially in digital infrastructure in lower income areas. Our investment of up to R14bn would have changed millions of lives and created thousands of jobs. This [decision] comes after the concerns of our competitors, involved in the competition hearings process and the department of trade industry & competition were comprehensively addressed through remedies and commitments by the parties.”
Maziv had committed to capital expenditure of at least R10bn over five years, including rolling out fibre infrastructure past at least 1-million new homes in lower income areas.
The parties had also committed to creating as many as 10,000 jobs and establishing a R300m enterprise and supplier development fund.
The commission said the conditions offered did not fully address the resultant harm to competition and welcomed the tribunal’s decision.
Maziv said it was disappointed but respected the tribunal’s process. “We will await the reasons for the prohibition to consider our options and remain committed to driving innovation and economic growth through the power of connectivity”.
The transaction, announced in November 2021, was approved by SA’s telecom regulator but failed to gain the backing of the commission, which conducted an investigation that took almost 22 months.
The tribunal heard evidence from various factual witnesses in addition to Vodacom and Maziv, including Vox’s Frogfoot Networks, Telkom’s consumer, small business and mobile units, MTN, Rain and Hero Telecoms. Four economic experts also presented evidence on behalf of the commission, Vodacom, Maziv and MTN.
Update: October 29 2024
This story has been updated with new information throughout.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.