While mobile operator Vodacom says it is “disappointed” with the Competition Commission’s recommendation to prohibit its bid to merge with fibre firm Maziv, it says it’s not yet over for the proposed transaction.
The telco issued a statement after the competition watchdog today announced the proposed deal will likely prevent or lessen competition in several markets and that the conditions offered by the merging parties do not fully address the resultant harm to competition.
In November 2021, Vodacom announced the agreement to acquire a co-controlling interest in all of the material assets owned by JSE-listed Remgro unit Community Investment Ventures Holdings, including fibre network operators Vumatel and Dark Fibre Africa.
Says Vodacom in its statement: “Upon completion, Vodacom will hold a 30% co-controlling interest in a newly-formed entity Maziv, the open access fibre infrastructure company that operates Vumatel and Dark Fibre Africa and the fibre assets which Vodacom will contribute into Maziv, as detailed in the terms announcement.”
According to the mobile operator, the proposed transaction sought to “accelerate South Africa’s fibre reach, network quality and resilience, fostering economic development and helping to bridge South Africa’s digital divide in some of the most vulnerable parts of our society”.
Earlier today, the Competition Commission announced its recommendation to the Competition Tribunal to prohibit Vodacom’s proposed purchase of the 30% stake in Maziv, it notes.
“Having engaged extensively with the Competition Commission’s investigative team since the proposed transaction was announced, Vodacom is surprised and disappointed with the Competition Commission’s recommendation given that both Vodacom and CIVH have endeavoured to thoroughly address competition-related concerns through a list of remedies and public interest commitments put forward to the Competition Commission,” adds Vodacom.
“Though we are disappointed, it is important to note that the Competition Commission’s recommendation is not the end of the process. Instead, the next step is for the proposed transaction to be presented to the Competition Tribunal. This would have been the case even if the Competition Commission were to have recommended the proposed transaction for the Competition Tribunal's approval.”
Vodacom explains that the Competition Tribunal is an independent adjudicative body and is one of three independent authorities established in terms of the Competition Act.
Looking to the process with the Competition Tribunal, Vodacom says it intends to showcase the strong public interest and pro-competitive advantages the proposed transaction would have for the fibre market, and the country as a whole.
“In Vodacom’s view, the proposed transaction will, in fact, help bridge the digital divide and enhance competition in the fibre market, as the parties have made a firm commitment to ensuring access to Maziv’s fibre assets – including Vodacom’s fibre assets contributed as part of the transaction – will be made available through an open access, non-discriminatory pricing model,” the telco states.
It adds the proposed transaction will significantly propel South Africa’s social development and would be highly beneficial for the country, the economy and lower income households on a number of fronts, including:
- Maziv committing to invest capex of at least R10 billion over a five-year period, including the commitment to pass at least one million new homes in lower income areas, such as Alexandra, with fibre infrastructure over a five-year period.
- A commitment to create up to 10 000 new jobs, while at the same time providing job security and enhanced benefits for current employees potentially impacted by the transaction.
- Prioritising SMME development by establishing a new enterprise and supplier development fund of R300 million over three years, focused on increasing the level of localisation across the value chain.
- The investment by Vodacom in excess of R13 billion into South Africa through this transaction would come at a time when attracting capital investment is particularly challenging. This level of investment cannot be made by Maziv alone, and is over and above Vodacom’s pledge at the recent SA Investment Conference to invest R60 billion over five years, the company says.
“We firmly believe the transaction will deliver substantial benefits to both the South African consumer and the economy. Vodacom’s planned investment holds particular significance, as a considerable proportion will be focused on developing new fibre infrastructure.”