As Vodacom and Remgro gear up to face the Competition Appeals Court this week over their R13bn fibre merger, the companies have decided to rejig the terms of their agreement.
Under the new construct, Remgro has revealed that its telecom unit Community Investment Ventures Holdings (CIVH), operating as Maziv, is now valued at R36bn, inclusive of internet service provider Herotel.
According to the original terms, SA’s largest mobile operator was meant to take a 30% stake in Maziv, together worth an estimated R13bn with the option of 40%. That option is now down to 34.95%.
Vodacom will, under the revised transaction terms:
- Contribute its fibre to home, fibre to the business, and business-to-business transmission access fibre network infrastructure valued at R4.9bn in return for new shares in Maziv.
- Subscribe for new shares in Maziv for R6.1bn of cash.
- Acquire additional Maziv shares from CIVH sufficient to reach the 30% shareholding mark.
Vodacom expects to buy shares from CIVH at a cost of R2.5bn.
The JSE-listed firms have been fighting for almost four years to get the deal over the line, even receiving backing from trade, industry & competition minister Parks Tau.
Earlier in the month, the Competition 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”.
The merger of the two fibre businesses was rejected by the tribunal in October. It would have seen the transaction, announced in November 2021, approved by SA’s telecom regulator but failed to gain the backing of the Competition Commission, which conducted an investigation that took almost 22 months.
Maziv intends to pay a dividend of up to R4.2bn before the deal comes into effect, anticipating the big cash injection from Vodacom. Should this be done the amount of cash that Vodacom will have to shell out will be reduced by up to R1.3bn.
In March, Maziv — which houses Vumatel, SADV, Rise Telecoms and BritelinkMCT — received good news when competition authorities approved Vumatel’s purchase of Herotel.
As a consequence of this deal, Vodacom will subscribe for additional new shares in Maziv as consideration for its 30% of the Maziv stake in Herotel for R600m in cash.
The long stop date for the transaction has again been extended, this time moving from July 18 to September 30. Should it then be approved the long stop date will be extended to November 30, if required.
Overall, this deal is expected to boost fibre infrastructure investment in SA.
Vodacom, for example, is 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.
On the other hand, 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 Competition Appeals Court has directed that the appeal will now be heard on one day only, July 22.
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