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South Africa's CompCom says no to Vodacom-MAZIV deal

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South Africa's Competition Commission (CompCom) has recommended that service provider Vodacom's acquisition of a stake in fiber operator MAZIV be blocked.

The acquisition would have brought Vumatel, one of the country's fiber-to-the-home (FTTH) network operators, and Dark Fibre Africa (DFA), which provides fiber services in the country's cities, into Vodacom's orbit.

Community Investment Ventures Holdings (CIVH) owns major South African fiber players Vumatel and DFA, which merged and rebranded as MAZIV in September 2022.

The competition watchdog said it has found no major benefits from the proposed transaction that were not already in existence.

In a statement, the CompCom said the telco's acquisition, valued at $696 million, "is likely to substantially prevent or lessen competition in several markets and that the conditions offered do not fully address the resultant harm to competition."

"Further, the public interest commitments provided by the merger parties do not outweigh the competition concerns and raises several vertical and horizontal competition concerns," the competition watchdog added.

The CompCom felt that the proposed merger would result in the loss of direct competition between Vodacom and MAZIV in the areas where both have deployed fiber, offering an incentive for self-preferencing and discriminatory behavior.

That judgement also seems to imply that price competition would suffer and there might thus be less benefit to underserved low-income and rural consumers, especially in relation to 5G fixed wireless access (FWA).

The announcement is the second significant move from the watchdog in a few weeks after the body questioned the dominance of big tech firms operating in the country, including Google.

Vodacom shocked by CompCom's decision

Telecoms operator Vodacom has vowed to fight the decision to block its acquisition of MAZIV.

In May 2023, the telco expressed ambitions to increase its fiber reach, specifically in low-income areas, through a deal with MAZIV.

The deal has been on the cards since November 2021, when Vodacom announced it would make a strategic investment in CIVH, worth about $875 million at the time.

Vodacom Group CEO Shameel Joosub.   (Source: Vodacom)
Vodacom Group CEO Shameel Joosub.
(Source: Vodacom)

Under the deal, the telco would have contributed its fiber assets to the merged entity, which would have made its infrastructure available on an open-access basis to Internet service providers.

It had been expected the deal would be approved but with customary conditions.

"Though we are disappointed, it is important to note that the Competition Commission's recommendation is not the end of the process. Instead, the next step is for the proposed transaction to be presented to the Competition Tribunal," Vodacom said in its responding statement.

"This would have been the case even if the Competition Commission were to have recommended the proposed transaction for the Competition Tribunals approval," it added.

Vodacom said it intended to show the Competition Tribunal the strong public interest and pro-competitive advantages that the proposed transaction would have on the fiber market as well as in South Africa as a whole.

"In Vodacom's view, the proposed transaction will in fact help bridge the digital divide and enhance competition in the fiber market as the parties have made a firm commitment to ensuring access to MAZIV's fiber assets – including Vodacom's fiber assets contributed as part of the transaction – will be made available through an open access, non-discriminatory pricing model," it concluded.

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*Top image source: MAZIV.

— Matshepo Sehloho, Associate Editor, Connecting Africa

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