Vodacom getting ready to finalise R13 billion deal
Vodacom and Remgro have restructured the terms of the major R13 billion acquisition of fibre group Maziv as the companies move more confidently towards finalising the deal.
In separate announcements on Friday (18 July), Vodacom and Remgro outlined changes to the deal.
Vodacom is moving to acquire a 30% stake in the fibre assets of Community Investment Ventures Holdings (CIVH), which owns Vumatel and Dark Fibre Africa (DFA). Remgro has a 57% stake in CIVH.
The merger will see Vodacom acquire up to 40% of the ordinary shares of a newly created wholly owned subsidiary of CIVH called Maziv, which was mainly established to facilitate the transaction.
In terms of the new deal, Vodacom will contribute high-speed fibre-to-home (FTTH), fibre-to-the-business (FTTB), and business-to-business transmission access fibre network infrastructure valued at R4.9 billion in return for new shares in Maziv.
The group will also subscribe for new shares in Maziv for R6.1 billion in cash and acquire additional Maziv shares from CIVH, estimated to be R2.5 billion, sufficient to increase its shareholding to 30%.
In anticipation of the injection of Vodacom cash and assets, Maziv intends to reset its capital structure by declaring a pre-implementation dividend of up to R4.2 billion.
Should this dividend be declared, Vodacom’s cash consideration will be reduced by up to R1.3 billion.
Therefore, Vodacom’s aggregate transaction price will amount to R12.2 billion, assuming Maziv declares the full pre-implementation dividend. Without the dividend, it would be R13.5 billion.
This represents a pre-acquisition transaction equity value of R29.8 billion or R34.0 billion if no pre-implementation dividend is declared.
However, Vodacom noted that it might be on the line for more.
Post the 2021 negotiations on the deal, Maziv acquired 49.96% of Hero Telecoms Proprietary Limited (Herotel).
Putting Herotel into the mix, the overall transaction equity valuation will increase to between R29.8 billion an R36 billion, depending on the implementation dividend.
Vodacom noted that the longstop date for the transaction has been extended to 20 September 2025, with an option to extend it further to 30 November 2025.
This is to give room for the Competition Appeals Court (CAC) process to play out.
Vodacom and Maziv are currently appealing the prohibition of the deal before the CAC, with the case being heard, unopposed, on 22 July.
While the Competition Commission and Tribunal had rejected the terms of the deal, the parties continued to negotiate and reached a new structure that addressed the competition concerns raised.
This does not guarantee that the prohibition will be overturned, with the Competition Commission now supporting the deal and not opposing the appeal, the prospects that the deal goes through are positive.
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