Major R13 billion Vodacom merger blocked
The Competition Tribunal has nixed Vodacom’s proposed acquisition of a 30% to 40% stake in Vumatel and DFA’s parent company, CIVH.
The proposed transaction would have combined the country’s largest mobile operator, Vodacom, with one of South Africa’s largest fibre infrastructure players, Maziv.
Maziv is a wholly-owned subsidiary of Community Investment Ventures Holdings (CIVH).
The deal between Vodacom and CIVH would have seen the companies pool their fibre networks, with Vodacom owning a 30% to 40% stake in the combined entity, Maziv, for over R13 billion.
Maziv was established specifically to hold CIVH and Vodacom’s fibre assets and facilitate the transaction.
CIVH has two main operating subsidiaries, Dark Fibre Africa and Vumatel.
In terms of the proposed transaction, Vodacom intended to acquire a certain shareholding in Maziv and to sell certain assets to Maziv.
The Tribunal’s decision to prohibit the proposed merger follows an extensive hearing that took place over 26 days between 20 May to 27 September 2024.
The parties also made further written submissions after this, the last of which was received by the Tribunal on 16 October 2024.
During the hearing, the Tribunal heard evidence from various factual witnesses, including from each of the merging parties, Frogfoot Networks, Telkom, MTN, and Rain.
At the Tribunal’s request, Hero Telecoms also provided factual testimony.
In addition to the factual witnesses of the abovementioned firms, four economic experts presented evidence on behalf of the Competition Commission, the merging parties and MTN.
The Department of Trade, Industry and Competition and the Communication Workers’ Union also participated in the proceedings.
The Tribunal said its detailed reasons for rejecting the deal would be published in due course.
Maziv said it noted and respected the ruling, but is disappointed at the outcome.
“We will await the reasons for the prohibition in order to consider our options and remain committed to driving innovation and economic growth through the power of connectivity,” it said.
Shameel Joosub, CEO of Vodacom Group said the Tribunal’s decision was surprising.
“South Africa desperately needs additional significant investment, especially in digital infrastructure in lower income areas.
“Our investment of up to R14 billion would have changed millions of lives and created thousands of jobs. This comes after the concerns of our competitors, involved in the Competition Hearings process, and the DTIC were comprehensively addressed through remedies and commitments by the parties,” he said.
Vodacom said it awaits the Tribunal’s detailed reasons for prohibiting the transaction in due course, before considering all options, which may include an appeal in the Competition Appeal Court.