Khudusela Pitje, founder and CEO of New GX Capital, has criticised South Africa’s competition regulators over the time they took coming to a decision over the proposed acquisition by Vodacom of a stake in fibre operator Maziv – only to seek the deal’s prohibition.
The proposed deal, which was ultimately blocked by the Competition Tribunal last October, would have seen Vodacom acquire a 30-40% co-controlling stake in Maziv in a multibillion-rand transaction.
Maziv is controlled by CIVH, which is in turn is controlled by Remgro. Pitje and his family make up one of the founding members of CIVH, the holding company of Dark Fibre Africa (DFA) and Vumatel.
“From my family office perspective – and not a CIVH perspective – as an investor, I am disappointed in the fact that this is probably one of the unique businesses where two black families (Pitje’s and businessman Joe Madungandaba’s) were founding members of what everyone sees today. In all the processes, where you talk about public interest, you normally have to address BEE, but this business was built by two black families, among other investors, who were involved from the start,” Pitje said in an exclusive interview with the TechCentral Show to be published later this week. “We are disappointed to see that such a landmark transaction has been ongoing for over three years.”
The Competition Tribunal in March finally released its reasons document – months after its deadline to do so – explaining its rationale for blocking the deal. Although the full, 355-page reasons document has only been made available to the merging parties (for now), the tribunal described the deal as anticompetitive, saying it would ultimately harm consumers of data services in South Africa.
Township fibre
But Pitje said the open-access commitments made by Vodacom, which had planned to make its own fibre assets available to Maziv under the deal, would have allowed smaller internet service providers to participate in the deal’s upside as business would have flowed to them.
According to Pitje, the deal would also have helped to “bridge the digital divide between the suburbs and the townships”, a problem CIVH managed to get around by building what Pitje referred to as “potentially the world’s first prepaid fibre network”.
“Everybody knows how to distribute mobile products and other technologies, but this we had to build from scratch,” he said.
Read: Vodacom-Maziv merger fight heads to court in July
He pointed to Alexandra, a densely populated, low-income township in Johannesburg, where Vumatel has deployed a low-cost fibre network, offering internet access to households for R99/month. With the pilot in Alexandra having proven the concept, Vumatel was reliant on funds from the blocked Vodacom deal to extend this offering to other townships across the country.
Pitje cast doubt on how the tribunal could confidently predict the outcome of a model the market has never tried before, adding that long-time Maziv shareholders would not risk losing value at the expense of Vodacom.
“It shows a lack of appreciation for the control structure of CIVH. Remgro and ourselves jointly control CIVH at the top, and Vodacom would be getting some rights at Maziv [below that]. It is highly unlikely that shareholders would want to lose value [to Vodacom] after 20 years of ramping up the network,” said Pitje.
Pitje said market consolidation is an ongoing trend in the telecommunications sector worldwide, including in Europe and the Americas, and this is largely driven by the high cost of infrastructure roll-out, long investment recuperation times and thinning margins.
He said the flavour of consolidation in South Africa is somewhat unique because the general trend involves like-for-like acquisitions, with mobile operators acquiring others like them and fibre operators doing the same. The Vodacom-Maziv transaction would have been between a fibre operator and mobile operator but was still driven by the same forces that are spurring consolidation in the rest of the world, he said.
Read: Vodacom fibre deal is ‘anti-competitive and irreversible’: tribunal
“Regulatory certainty is key. When you look at the value of assets as a foreign investor, what do you discount for when there is uncertainty? And as a local who has worked for 20 years creating value, how is that value destroyed in the process? The losers here are the two black families who have been involved [in the industry] for 20 years and, potentially also the lower-LSM markets where expansion would have happened faster,” said Pitje.
The competition appeal court will hear arguments against the Competition Tribunal’s decision to block the Vodacom-Maziv transaction in July. – © 2025 NewsCentral Media
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