Trade, industry & competition minister Parks Tau has joined celebrations of Vodacom and Remgro reaching a deal with the Competition Commission to let them proceed with their R13bn fibre merger.
The two groups’ almost four-year mission to get the deal over the line saw the minister entering the fray, going against the commission — an entity under his purview — when he came out in support of the transaction.
This week, the commission said it had reached an agreement with Vodacom and Remgro’s fibre unit, Maziv, on revised conditions that “substantially remedy the competition concerns raised by the commission in its recommendation to the Competition Tribunal that the Vodacom/Maziv merger be prohibited”.
As such, this development is a victory for Tau, who has been seen as a progressive force for the country’s trade, industry & competition efforts.
In a statement on Tuesday, Tau welcomed the agreement.
“The substantial public interest commitments made by the merging parties will significantly improve access to affordable internet for underserved communities, thus enabling easier participation in economic activity, particularly for young people.”
The minister further welcomed the investment committed by the parties.
“This commitment will ensure that SA participates meaningfully in the global economy through new sectors like generative artificial intelligence (AI), the internet of things and other ICT related sectors which will propel the world into the future,” he said.
The minister thanked “all parties involved for their constructive engagement throughout this process”.
The merger of the two fibre businesses was rejected by the tribunal in October.
It would have seen Vodacom take a 30% stake in Remgro’s telecom unit Community Investment Ventures Holdings (CIVH), operating as Maziv, together worth an estimated R13bn with the option of 40%.
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.
After an intense period of negotiation, the parties reached consensus on three major points.
Division
The minister has long 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.
It is expected that large amounts of investment will flow from this deal.
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.
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 low income areas.
The parties had also committed to establishing a R300m enterprise and supplier development fund.
Maziv secured a R25bn loan led by Standard Bank for a fibre expansion initiative in late 2023.
Standard Bank, which is bullish about the sector, had previously backed MetroFibre Networx’s R5bn fibreoptic expansion through a similar arrangement.
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.