Sylvia Duruson
South Africa’s Competition Tribunal has issued an order prohibiting a proposed deal between telecoms operator Vodacom and fiber company Maziv (previously branded as MAZIV). The Tribunal’s decision comes as a blow to Vodacom’s ambitions to expand its fiber footprint, particularly in low-income areas, through this strategic alliance.
Vodacom had planned to invest up to R14 billion (US$790 million) into Maziv, the fiber holding company of Vumatel and Dark Fibre Africa (DFA), which is owned by Community Investment Ventures Holdings (CIVH). The Tribunal, however, did not provide explicit reasons for its decision to block the deal, stating that the detailed reasons will be issued in due course.
The Tribunal highlighted that the proposed transaction would have combined the country’s largest mobile operator, Vodacom, with one of South Africa’s largest fiber infrastructure players. This move was likely seen as a potential threat to competition in the market.
The decision follows the earlier recommendation by South Africa’s Competition Commission (CompCom) in August 2023 to not allow the deal. The competition watchdog found no significant benefits from the proposed transaction that were not already in existence.
Vodacom’s Group CEO, Shameel Joosub, expressed deep surprise and disappointment at the Tribunal’s decision, stating that the deal was designed to assist Maziv in growing its fiber footprint into lower-income areas, which would have been highly beneficial for South Africa.
Joosub emphasized that the proposed transaction had substantial positive public interest effects, as it would have involved investments of at least R10 billion ($565 million) over five years, predominantly in low-income areas, creating up to 10,000 new jobs and providing high-speed internet to over 600 schools and police stations at no cost.
Vodacom said it would await the Tribunal’s detailed reasons before considering its options, which may include an appeal in the Competition Appeal Court. The proposed deal was first announced in November 2021, when Vodacom had planned to invest about $875 million into CIVH, the parent company of Maziv.
This decision by the Competition Tribunal comes at a time when South Africa is grappling with the need for significant investment in digital infrastructure, particularly in underserved and low-income areas. The Tribunal’s stance, however, suggests a cautious approach to ensuring fair competition in the market, even if it means delaying or preventing potentially transformative investments.
