The acquisition of a stake in Remgro Ltd.’s fiber companies by Vodacom Group Ltd. is now at risk after the Competition Tribunal of South Africa received a request from the country’s antitrust regulator to halt the transaction. The acquisition would have been the largest fiber transaction in the nation to date.
The 13.2 billion rand ($696 million) acquisition by Johannesburg-based Vodacom “is likely to substantially prevent or lessen competition in several markets,” the Competition Commission stated in a statement on Tuesday.
A co-controlling interest in all of the fiber assets owned by Remgro affiliate Community Investment Ventures Holdings (CIVH), which is listed on the Johannesburg Stock Exchange, was first offered by Vodacom, led by CEO Shameel Joosub, in 2021. Operators of fiber networks, Vumatel and Dark Fibre Africa, are among them.
Vodacom had to wait 21 months for the anti-trust authorities to refuse the merger because it was subject to CompCom clearance.
According to CompCom, Maziv, and Vodacom both have significant pre-merger aspirations to increase service, especially in underserved low-income populations.
“These expansion plans would bring the benefits of price competition and consumer choice to underserved or unserved consumers,”
Analysts claim that the intense competition in the fiber market, which is driving the continued search for fiber assets, including those of South Africa’s telecom giant Telkom, is what led to the likelihood of the Vodacom and CIVH acquisition.
Vodacom reacted that it is shocked and disappointed with the recommendation, considering that both Vodacom and CIVH have endeavored to fully resolve competition-related issues, after substantial involvement with CompCom’s investigative team since the proposed merger was exposed.
The telecom firm said that it sent a list of remedies and public interest pledges to the authorities.
“In Vodacom’s view, the proposed transaction will help bridge the digital divide and enhance competition in the fibre market because the parties have made a firm commitment to ensuring access to Maziv’s fibre assets – including Vodacom’s fibre assets contributed as part of the transaction – will be made available through an open access, non-discriminatory pricing model,” it said.
Finally, Vodacom stated that the investment above R13 billion into South Africa through this transaction would come at a time when attracting capital investment is particularly difficult.
