Despite Competition Commission rejection in South Africa, it is still game-on for a stake in Vumatel and Dark Fibre Africa
Broker firm Rand Swiss founder Gary Booysen said it was not the end of the road for Vodacom’s deal to buy Remgro’s fibre businesses, as the companies can still appeal to the Competition Tribunal and then, Competition Appeal Court in South Africa.
The Competition Commission recently rejected Vodacom’s acquisition of a minority stake in Remgro’s unit suggesting the deal is “likely to substantially prevent or lessen competition in several markets and that the conditions offered do not fully address the resultant harm to competition.”
The ZAR13.2bn deal would see Vodacom holding a 30% to 40% equity interest in Maziv Proprietary Limited, which holds the material assets owned by Remgro subsidiary Community Investment Ventures Holdings (CIVH), including fibrecos Vumatel and Dark Fibre Africa (DFA). Maziv will acquire selected Vodacom fibre assets.
The Competition Commission has referred the deal to the Competition Tribunal and recommended it block the transaction.
Speaking on iono.fm, Booysen said he thought it likely the tribunal would overturn the commission’s decision, suggesting the competition concerns were “strange” and that the players can make further concessions regardless. Vodacom can also appeal to the Competition Appeal Court if it doesn’t agree with the tribunal’s decision.
Booysen conceded fibre does compete with fixed wireless access – a concern raised by the commission where it said the proposed merger will result in the loss of direct competition between Vodacom and Maziv in the areas where both Vodacom and Maziv have deployed fibre.
However, he suggested Vodacom’s commitment wouldn’t disappear – including rollout targets in underserved low-income and more rural areas – due to the merger. “Vodacom has commitments based on a spectrum allocation to roll out to low-income areas, and those commitments remain in place whether this deal goes through or not,” he said. “Do you want to roll out parallel fibre networks or just build infrastructure once? What is more efficient for an economy?”
“I think this decision might be overturned at the Competition Tribunal or the Competition Appeal Court because there are significant commitments and, ultimately, if Remgro and Vodacom make enough commitments, it should overturn the deal,” he added.
Maziv ready to make its case
In a statement to the SA market, Remgro said: “Vodacom’s proposed investment in excess of ZAR10bn in terms of the transaction will increase competition given that Vodacom-owned fibre assets will be made available on an open access, transparent and non-discriminatory basis to the market.
“In addition, the investment will enable Maziv to extend fibre infrastructure to new households within previously underserved, lower income areas, create new jobs and facilitate the creation of small to medium enterprises through a fund formed specifically for this purpose.
“The merging parties are committed to seeing the competition law related regulatory approval process to its conclusion and will continue to engage with the South African competition authorities to achieve these positive outcomes,” it stated.
In the Daily Investor, Maziv confirmed the deal was not the end of the process. The company said it believes all the Competition Commission’s concerns could be addressed by the conditions and commitments they proposed with Vodacom.