While the Competition Commission (CompCom) recently put the R14 billion merger deal between Vodacom and Maziv back on the table, smaller internet service providers (ISPs) are still concerned about the implications of competition on their businesses.
Earlier this month, the CompCom announced it had reached an agreement with Vodacom and Maziv on revised conditions that substantially remedy the competition concerns raised by the commission in its recommendation to the Competition Tribunal that the merger between the two firms be prohibited.
The announcement came ahead of the Competition Appeal Court hearing this month, where the firms are looking to challenge the blocking of the R14 billion merger deal.
The Competition Tribunal prohibited the deal in October last year, after it found the proposed deal would likely prevent or lessen competition in several markets, and that the conditions offered by the merging parties did not fully address the resultant harm to competition.
Under the deal, Vodacom is looking to acquire a 30% stake in the newly-created Maziv, with an option to increase the stake by 10%.
Speaking to ITWeb, Luvo Grey, president of the National Youth ICT Council, says: “While we acknowledge the Competition Commission’s attempt to impose revised conditions on the Vodacom-Maziv merger, we remain deeply concerned that the agreement still falls short of addressing the structural imbalances and systemic risks this deal poses to smaller ISPs and the broader digital inclusion agenda.”
Grey is of the view that the competition watchdog has not gone far enough in addressing anti-competitive concerns.
“The so-called ‘remedies’ appear more procedural than transformative. This merger entrenches vertical integration, giving Vodacom, already a dominant player in mobile, extensive influence over South Africa’s largest open-access fibre infrastructure through Maziv.
“No matter the promises of open-access or behavioural conditions, the reality is that structural market power cannot be undone with compliance clauses alone. Market concentration will only deepen, and smaller ISPs will face higher barriers to scale, less leverage in wholesale negotiations and reduced market diversity.
Not so open-access
While the rhetoric of open-access persists, the nature of control changes significantly once a large mobile operator owns the wholesale layer, Grey states.
“It is naïve to assume that Vodacom will not optimise the network in its own favour, whether through bundling, pricing strategies, or preferential treatment to its own retail operations. Smaller ISPs operating on Vumatel or DFA infrastructure already face difficult margins; post-merger, they risk being sidelined through subtle anti-competitive tactics such as predatory pricing, delay in provisioning, or limited product flexibility.
“We are urging smaller ISPs to build strategic cooperatives, diversify access technologies (such as fixed wireless or satellite), and form infrastructure-sharing alliances. Realistically, without wholesale price regulation, spectrum liberalisation and public funding support, the playing field remains heavily tilted in favour of dominant operators. Policy-makers must now fast-track pro-competitive interventions, like spectrum leasing for township operators, targeted infrastructure funding and stricter functional separation for vertically-integrated incumbents,” says Grey.
“This deal underscores the urgent need to rethink South Africa’s broadband strategy. If left unchecked, we will move from state-owned monopolies to private cartels, a future where digital infrastructure is controlled by a few mega-entities, and small players are relegated to scraps. The Competition Commission should not only impose behavioural conditions, but also enforce structural separation and mandate community-based access models to ensure inclusive participation in the digital economy.”
Leon Rolls, founding member of the Southern Africa Broadband Alliance, is totally against this transaction.
“Once again, we see a situation where money is used to swing towards the haves, while the have-nots are crushed,” he says.
“It is disheartening to see those that are supposed to protect smaller players simply turn a blind eye to their responsibility and duty. This will totally kill the competition in the space.”
Rolls adds that the Southern Africa Broadband Alliance has built nearly 2 000 hotspots under SA Connect 2, with the support of Broadband Infraco and the Small Enterprise Development and Finance Agency.
“With the recent budget speech, we are glad that there is a budget set aside to continue with SA Connect 2. We have seen that in this country, the monopoly operates by overpowering decisions in government using money as influence, and we hope that the minister continues on his drive to connect the people, while empowering the smaller players.”
According to Rolls, this deal proves South Africa is not ready for progressive development. “This does not stop us from our goal of deploying five million hotspots across the country and one day bringing the cost of data to R1 per day, if we must.
“Many of the ISPs operating alone will shut down because of this. The Southern Africa Broadband Alliance is calling on all ISPs in the space to come together and build community-based broadband network that empowers the people, while providing affordable internet.”
ISP empowerment
However, Simon Swanepoel, CEO of ISP RocketNet, has a different perspective on the revised conditions.
“From RocketNet’s perspective, the Competition Commission’s revised conditions have substantially addressed the key concerns that ISPs – including smaller players like us – initially raised. The commission identified three main issues and tackled each with concrete remedies.”
He notes that the Vodacom-Maziv deal, with the new conditions in place, offers several tangible benefits for smaller ISPs such as RocketNet.
“In summary, with this deal, we anticipate better infrastructure and continued fair access, which allow us to focus on what we do best – delivering affordable, customer-centric internet solutions. The enhanced network coverage and maintained open-access environment mean RocketNet can serve our customers with even faster and more reliable connections, without undue hindrances.
“In short, the deal empowers us, as a smaller ISP, to keep competing and even expand our reach, while also contributing to industry goals like closing the digital gap. As one industry peer noted, the increased fibre rollout and investment will ‘provide more business for all ISPs’ in the long run – we certainly see it that way. We’re confident that by doubling-down on customer satisfaction and clever service offerings, we can thrive alongside Vodacom-Maziv.”
He points out that while the Vodacom-Maziv deal is a significant shift, it doesn’t spell the end of diversity in the fibre sector.
“There’s plenty of space for multiple players (big and small) in South Africa’s broadband future. We view this as a unique collaboration aimed at accelerating infrastructure deployment, rather than a step toward a monopoly. As an ISP, RocketNet is excited to work within this evolving landscape – we think a mix of strong partnerships and fair competition will deliver the best outcomes for consumers and the industry as a whole.”
For Swanepoel, deals like this – when structured with strong pro-competition safeguards – can act as a catalyst for growth and innovation in the industry.
“The key is getting the structure right, and in this case the authorities have done a thorough job ensuring checks and balances. If approved, the Vodacom-Maziv partnership could accelerate the deployment of faster networks and new services, which is a win for the country. It’s helping to bring high-speed connectivity to more people, and that’s something we at RocketNet wholeheartedly support.”
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