The Commission noted that Vodacom is South Africa’s biggest mobile operator, while Maziv is one of the largest fibre infrastructure players.
The Competition Commission has welcomed the news that the Competition Tribunal has prohibited Vodacom and Business Venture Investments, also known as “Maziv”, from merging.
The Commission had in August 2023 recommended the deal be blocked, as it would lessen competition, particularly in the market for 5G Fixed Wireless Access (FWA) and fibre.
The merger
The Commission noted that Vodacom is South Africa’s biggest mobile operator, while Maziv is one of the largest fibre infrastructure players.
The deal included Vodacom acquiring 30% interest in Maziv. Vodacom would have also transferred fibre assets to Maziv.
The Commission said their findings revealed that the deal between the two would deprive low-income consumers of the benefits that fixed competition exerts on mobile products such as lower prices.
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No reasons for blocking the merger
“In addition, the Commission found that the merger creates the ability and incentive to partially foreclose or otherwise disadvantage rival MNOs, other internet service providers and fibre operators,” added the Commission.
In addition, the Commission did not find any significant benefits arising from the proposed merger that were not already independently planned prior to the merger or were not already in place.
The Tribunal issued the prohibition over the deal happening, without stating any detailed reasons or whether it agreed with the reasons given by the Commission.
26-day hearing to discuss merger
The Tribunal’s decision comes after a 26-day hearing between 20 May to 27 September 2024. The Tribunal took into consideration written submissions by Vodacom and Maviz, together with testimonies from witnesses such as Frogfoot Networks, divisions of Telkom SA, MTN and Rain.
“In addition to the factual witnesses of the abovementioned firms, four economic experts presented evidence on behalf of the Competition Commission, the merging parties and MTN,” said the Tribunal.
After issuing the order, it said it would issue the reason for the decision in due course.
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While the Commission is looking forward to the Tribunal’s reason for its decision, Vodacom aired its view and said it will also wait for detailed reasons before considering the next steps.
In its update on the merger to shareholders, the mobile operator said this deal would have assisted Maziv in growing its fibre footprint into lower-income areas, and this would have been beneficial for South Africans.
Vodacom noted that the Department of Trade, Industry and Competition had labelled the deal as having ‘substantial positive public interest effects.’
The next step for Vodacom is to consider including an appeal in the Competition Appeal Court.
The deal in the eyes of Vodacom
Vodacom said through the deal there was going to be an investment of at least R10 billion over a 5-year period, predominantly in low-income areas; creation of up to 10 000 jobs;
Establishing a R300 million enterprise and supplier development fund to prioritise Small Micro and Medium Enterprises (SMMEs) development, and providing high-speed internet to over 600 adjacent schools and police stations at no cost.
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Another one waits for reasons
Maziv expressed its disappointment in a statement. The company will wait for the reasons for the order by the Tribunal before taking any steps.
“We remain committed to driving innovation and economic growth through the power of connectivity.”
Minister to advise
Minister of Trade, Industry and Competition, Tau Perks said he notes the Tribunal’s prohibition of the merger, and once the reasons are known, he will asses and advise on the next steps in line with the Competition Act.
In his view, the parties involved in the merger were able to commit to substantial public interest conditions that will significantly boost investments and growth of fibre and mobile connectivity in the country.
“This in line with South Africa’s priorities for industrialisation, reindustrialisation, and investment to foster economic growth and create jobs.”
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