Regulatory Authority in South Africa Halts Vodacom-Maziv Fiber Merger, Sparking Fears of Monopolistic Tendencies

In a significant development for South Africa's digital landscape, the Competition Tribunal has prohibited a planned sale of Vodacom to fiber company Maziv. The decision, announced recently, comes as a blow to Vodacom's ambitions to expand its fiber footprint, particularly in low-income areas.

The deal, first announced in November 2021, was designed to assist Maziv in growing its fiber footprint into lower-income areas, a move that Vodacom's Group CEO, Shameel Joosub, deemed highly beneficial for South Africa. 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).

The Competition Tribunal's decision comes at a time when South Africa is in need of significant investment in digital infrastructure, particularly in underserved and low-income areas. The majority of the investments would have been directed towards these areas.

The Tribunal's decision not to allow the deal was based on the finding that the planned sale was likely to substantially prevent or lessen competition in the market. The competition watchdog found no significant benefits from the proposed transaction that were not already in existence.

Vodacom has stated that it will await the Tribunal's detailed reasons before considering its options, which may include an appeal in the Competition Appeal Court. The detailed reasons will be issued by the Tribunal in due course.

The proposed transaction would have combined the country's largest mobile operator, Vodacom, with one of South Africa's largest fiber infrastructure players. The deal, if approved, could have resulted in up to 10,000 new jobs being created.

Notably, Vodacom had planned to provide high-speed internet to over 600 schools and police stations at no cost through this deal. The fiber holding company of Maziv is owned by Community Investment Ventures Holdings (CIVH).

The Competition Commission of South Africa earlier recommended not to allow the deal in August 2023. The Tribunal's stance suggests a cautious approach to ensuring fair competition in the market, even if it means delaying or preventing potentially transformative investments.

As South Africa navigates its digital future, the decision serves as a reminder of the importance of maintaining a competitive market and ensuring equitable access to digital infrastructure. The outcome of Vodacom's potential appeal could shape the country's digital landscape for years to come.

Regulatory Authority in South Africa Halts Vodacom-Maziv Fiber Merger, Sparking Fears of Monopolistic Tendencies