In a show of support for Vodacom and Remgro’s fibre merger, the department of trade, industry and competition has filed notice that it will appeal against the Competition Tribunal’s blocking of the transaction, once the authority discloses its reasons for doing so.
The department, under minister Parks Tau, submitted a notice of appeal in the Vodacom/Maziv merger with the Competition Appeal Court late on Wednesday, to comply with deadlines for the submission of an appeal.
The move sparked interest because the same competition authorities — both the Competition Commission and Competition Tribunal — fall under Tau’s department.
This comes a day after Vodacom and Remgro told their shareholders that they would also appeal against the decision “that will be supplemented upon receipt of the Competition Tribunal’s reasons for the prohibition”.
At end-October, the tribunal announced its decision to block the merger in a move that sent shockwaves through SA’s telecom industry.
The proposed deal would see 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 the stake to 40%.
While the deadline for an appeal has now passed, the tribunal’s detailed reasons for prohibiting the transaction are yet to be published.
Tau’s participation in the merger proceeding was based “on public interest grounds, which led to substantial public interest commitments that would have significantly boosted investment, created jobs and resulted in growth of fibre and mobile connectivity in communities that lack adequate communication infrastructure”.
Earlier this month Vodacom CEO Shameel Joosub said the tribunal’s decision was a travesty, with the group vowing it would not walk away from the deal until it had explored all options.
This comes while the telecom industry is moving towards more co-investment, or at least the pooling of resources, regarding fibre investment requirements.
As with the R10bn spent annually by Vodacom and rival MTN in recent years to cover 99% of the country with their mobile networks, a similar effort is needed in fibre, which will come at huge cost. As such, operators are finding ways to pool their resources and share the risk.
If approved, the Vodacom/Maziv merger would make fibre more readily available and has the potential to create thousands of jobs, which would aid economic growth.
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