Vodacom’s fibre gamble just got another lifeline. After nearly four years of back and forth, the Competition Commission has flipped from foe to facilitator, signing off on revised conditions that let Vodacom tap Remgro’s Maziv fibre empire. It’s a tacit admission that in capital-hungry industries, market count matters less than who can actually build the network.
The new deal strings Vodacom to another R14bn fibre rollout, a five-year capex pledge that reaches deeper into low-income areas. Overlapping cables must now be sheared off swiftly, or a trustee will sell them, a backstop that regulators hope stops duopolists from hogging the wholesaler role. And a fast-track interim relief clause means any sneaky foreclosure can be slapped down before damage lingers.
That’s smarter than an outright ban. Blocking the tie-up stifles a chance to boost SA’s digital infrastructure. For one thing, the deal promised substantial investments, including sinking billions of rand into digging up the streets of Soweto or Mamelodi to lay fibreoptic cables, creating up to 10,000 jobs and establishing a R300m enterprise and supplier development fund.
Such statements are often used as public relations tactics to gain public backing, and the actual implementation might fall short, to be sure. Critics would also point out that Maziv, as a rational commercial enterprise, would fail to convince shareholders of decent returns by focusing on underserved areas.
There’s merit in these arguments. But the townships, ignored by big businesses for a long time as squalid slums, and as places to be feared, have emerged as the next bright growth for the likes of Capitec and Shoprite — investor darlings that owe their stratospheric ascent to the vast informal economy.
If shareholder returns alone — the metric the corporate world swears by — won’t cut it, the real test comes down to enforcement. Will SA’s Competition Tribunal and Competition Appeal Court, both historically prickly on big deals, hold the merged entity to its promises? And can watchdogs monitor thousands of street-level splices without turning a blind eye?
Still, the pivot shows regulators are waking up to tech realities. The notion that fewer operators automatically lead to higher phone bills and less choice is an oversimplification. MTN and Vodacom dominate, spending R20bn-R25bn annually on their network, and are miles more profitable than their closest rivals.
Take Cell C, for instance. It nearly wrote itself out of the script before it even hit its stride. Its rock-bottom prices — dazzling millions of users like a fire sale — felt unstoppable, until the network itself started sputtering under the weight of its own success.
By 2014, frustration boiled over spectacularly: one disgruntled subscriber hoisted a gargantuan billboard over the freeway, lambasting Cell C as “the most useless service provider in SA”. It was a billboard-sized reminder that, without sinking real billions into pipes and towers, aggressive price wars are just a house of cards waiting for the slightest breeze.
The Vodacom-Maziv tie-up was a test case for whether SA competition authorities were willing to adopt a more open-minded approach — an approach that recognises the need for consolidation in certain cases to achieve scale and ultimately benefit consumers.
Former European Central Bank president Mario Draghi’s report on European competitiveness underscores this point, emphasising the need for market concentration to incentivise investment and support European growth. Europe’s aversion to dominant players has led to fragmented markets and a lack of industrial giants capable of competing with their US and Asian counterparts, the report finds.
Ultimately, cheap data means little if there are no cables to carry it. In a country where digital exclusion deepens inequality, scale can be a force for good. The Competition Appeal Court next week will reveal if SA competition policy can evolve from counting market entrants to calibrating real-world outcomes.
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