Vodacom’s acquisition of a co-controlling stake of up to 40% in Vumatel parent Maziv is suddenly back on the table following a dramatic development in the case.
The Competition Commission said on Tuesday that it has reached an agreement with both Vodacom and Maziv, which also owns Dark Fibre Africa, that could see the deal proceed, despite both the commission and the Competition Tribunal’s earlier findings that it should not be allowed to happen on competition grounds.
The new “revised conditions … substantially remedy the competition concerns raised by the commission in its recommendation to the tribunal that the merger be prohibited. This agreement follows constructive engagements between the commission and the merger parties to remedy the deficiencies in the previous conditions identified by the tribunal in its prohibition of the merger,” the commission said in a statement.
According to the commission, there were three main competition concerns that were not adequately addressed by the proposed conditions at the time of concluding the tribunal hearings.
First is the horizontal reduction in competition between fixed-wireless access and fibre to the home (FTTH). “The conditions positioned to address this concern were that Vodacom would offer FWA where it rolled out 5G and that it would price it “competitively”. However, the commitments on roll-out of 5G sites and roll-out of FTTH were insufficient to incentivise the parties to encourage consumer access at competitive prices and ensure third party access to FTTH.
“The revised conditions address these shortcomings by improving the capex commitment by Maziv and extending it to a five-year period post-merger to ensure that Maziv remains incentivised to service third-party network operators,” the commission said.
Coverage commitments
The revised conditions also promote competition between FTTH and FWA services through enhanced coverage commitments coupled with connection commitments. “The parties will need to price competitively if they are to achieve the connection commitments.”
Vodacom and Maziv have also agreed to maintain lower-cost broadband packages to ensure that lower-income consumers have a range of competitively priced packages to choose from. And the previous conditions were “inadequate insofar as they included a ‘weak’ divestiture condition that did not adequately incentivise the merging parties to divest the overlapping infrastructure”, which the new agreement rectifies.
Read: Financial picture at Vumatel parent deteriorates
“The revised conditions put in place a standard divestiture arrangement whereby the failure to sell the assets within a particular period results in a trustee divestiture process to ensure the assets are divested and pre-merger competition is restored. The condition follows the standard formulation used in other merger transactions and requires that a transparent and competitive process be followed to identify a proposed purchaser.”
The revised conditions also introduce changes to Maziv’s governance structure that limit the merged entity’s incentives to foreclose competitors.
“The conditions now also incorporate an enhanced fast-track interim relief process that will address potential foreclosure concerns while the lengthier formal process to investigate any alleged foreclosure is under way. This ensures that any attempt to get a first-mover advantage that will have an enduring effect in the market can be prevented through fast-track interim relief.”
Also, the parties have agreed to “significant improvements to the public interest commitments, which increase the substantiality of these commitments”.
“These include additional capex spend to roll-out new fibre-to-the-business, FTTH and fibre-to-the-site infrastructure, free access to 1Gbit/s fibre lines for public libraries and clinics passed by FTTH infrastructure, an increase in the number of police stations that Vodacom will provide with FWA products, an additional commitment to enterprise development, and an increase in the employee share ownership plan previously agreed.”
Speaking to TechCentral on Tuesday, Maziv chairman Pieter Uys said the merger parties have during the last couple of months continued to engage with the Competition Commission to try and find solutions to the regulator’s concerns.
“In some cases, where our conditions did not quite meet their concerns, public interest benefits offset any residual concerns they might have had,” said Uys.
The competition appeal court is set to review the matter from 22 July. The commission was initially meant to file papers explaining its opposition to the deal. However, said Uys, following the engagements with the merger parties, it instead wrote a letter to the tribunal explaining it would no longer oppose the deal.
‘Significant milestone’
“There are no longer any opposing parties at the appeals court, but the court still has to review the tribunal’s decision,” he added.
In a statement on Tuesday, Vodacom said it welcomed the commission’s announcement, describing it as a “significant milestone” to its ongoing efforts to enhance digital infrastructure and connectivity in South Africa.
“We are thrilled with the commission’s decision as it aligns with our purpose of connecting people to a better future and our vision of bridging the digital divide through world-class connectivity,” said Vodacom Group CEO Shameel Joosub in the statement.
“Should the transaction be approved by the competition appeal court, I’m confident that it will enable us to accelerate network expansion, help address the cost to communicate and contribute meaningfully to job creation.” – © 2025 NewsCentral Media
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