SA Competition Tribunal prohibits Vodacom-Maziv deal

South Africa's Competition Tribunal today issued an order prohibiting a proposed deal between telecoms operator Vodacom and fiber company Maziv (previously branded as MAZIV).

Vodacom was planning to invest up to R14 billion (US$790 million) into Maziv, the fiber holding company of Vumatel and Dark Fibre Africa (DFA), which is in turn owned by Community Investment Ventures Holdings (CIVH).  

The decision is a blow to Vodacom's ambitions to expand its fiber footprint, specifically in low-income areas, through a deal with Maziv.

The Tribunal did not give explicit reasons for its decision to block the deal but said it came after an extensive 26 day hearing that took place between May 20 and September 27, 2024.

It said the reasons for its decision "will be issued in due course."

The Tribunal did however point out that the proposed transaction would have combined the country's largest mobile operator with one of South Africa's largest fiber infrastructure players.

"In terms of the proposed transaction, Vodacom intended to acquire a certain shareholding in Maziv and to sell certain assets to Maziv," the Tribunal commented.

The Tribunal decision came after South Africa's Competition Commission (CompCom) in August 2023 recommended that the deal not be allowed.

At the time the competition watchdog said it found no major benefits from the proposed transaction that were not already in existence.

In a statement today the CompCom said it welcomed the decision by the Competition Tribunal to prohibit the proposed merger.

Vodacom 'surprised and disappointed'

"I am deeply surprised and disappointed by the Tribunal's decision. South Africa desperately needs additional significant investment, especially in digital infrastructure in lower income areas," Vodacom Group CEO Shameel Joosub said in a statement in reaction to the Competition Tribunal's decision.

Vodacom said the proposed transaction was designed to assist Maziv in growing its fiber footprint into lower income areas and "would have been highly beneficial for South Africa."

Vodacom Group CEO Shameel Joosub. (Source: Vodacom Group)

The operator went on to say that during the Competition Tribunal proceedings South Africa's Department of Trade, Industry and Competition (DTIC) described the transaction as having "substantial positive public interest effects" on the basis that the merger parties committed to:

Joosub claimed the investment "would have changed millions of lives and created thousands of jobs."

"This comes after the concerns of our competitors, involved in the Competition Hearings process, and the DTIC were comprehensively addressed through remedies and commitments by the parties," Vodacom's CEO added. 

Vodacom said it would await the Tribunal's detailed reasons for prohibiting the transaction before considering all its options, which may include an appeal in the Competition Appeal Court.

The proposed deal was first announced in November 2021, when Vodacom said it planned to invest about $875 million into CIVH, which owns Maziv and its fiber sub-brands Vumatel and DFA.

In August 2023, Maziv also embarked on a $21 million infrastructure expansion project to upgrade its overall network footprint and infrastructure.