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Tribunal to decide on Vumatel, CIVH union

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Niel Schoeman, executive chairman of Vumatel.
Niel Schoeman, executive chairman of Vumatel.

The Competition Tribunal is today kicking off a competition hearing into the proposed take-over of Vumatel by Community Investment Ventures Holdings (CIVH).

This, after local investment firm CIVH acquired 34.9% of Vumatel for an undisclosed amount last year, and entered into an agreement with Vumatel shareholders to acquire the remaining 65.1%, subject to funding and regulatory approvals.

Vumatel's fibre-to-the-home (FTTH) network spans more than 8 000km over a residential area footprint that it leases to Internet services providers, which in turn sell Internet products to consumers.

Vumatel entered the FTTH market in 2015 when it rolled out a project to provide the Johannesburg suburb of Parkhurst with high-speed Internet. The company has since expanded significantly in Gauteng, as well as in Cape Town and Durban.

Detailing reasons for the hearing, the tribunal says Remgro's Octotel opposes the CIVH and Vumatel merger.

CIVH owns Dark Fibre Africa (DFA), which operates over 10 000km of optic fibre infrastructure, that it leases to its wholesale customers on an open-access basis. Further, CIVH is jointly controlled by Industrial Electronic Investment (IEI) and New GX. IEI is controlled by Venfin, which is, in turn, controlled by Remgro.

The tribunal states: "The commission, which assesses large mergers before referring them to the tribunal for a decision, evaluated the merger and has raised vertical competition concerns in the proposed transaction because DFA is considered to be the largest backhaul provider, assessed on a regional basis.

"It has also raised horizontal competition concerns because Remgro indirectly controls Octotel, a Cape Town-based competitor to Vumatel. Octotel has raised concerns with the proposed merger and has been permitted to make submissions to the tribunal as an 'intervenor'.

"The commission has recommended the proposed transaction be approved with conditions. However, Octotel believes no conditions can address the concerns it has raised."

The hearings are being held at the tribunal court room in Sunnyside, Pretoria.

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