South Africa’s Competition Tribunal has blocked Vodacom’s attempt to acquire a significant stake in Maziv, a subsidiary of Community Investment Ventures Holdings (CIVH). The proposed deal would have allowed Vodacom to hold a 30% to 40% share in Maziv, merging its assets with those of Dark Fibre Africa (DFA) and Vumatel, two of the country’s largest fibre network operators owned by CIVH.
The decision follows nearly two years of regulatory review, culminating in an extensive 26-day hearing that concluded in September 2024. Vodacom expressed deep surprise and disappointment at the ruling, stating that both the telecom company and Maziv are awaiting the Tribunal’s detailed rationale. They are considering an appeal through the Competition Appeal Court to explore other potential options for moving forward.
The Tribunal’s decision aligns with the Competition Commission’s earlier recommendation to prohibit the deal due to potential risks to competition in the telecom sector. The Commission had referred the matter to the Tribunal after the Independent Communications Authority of South Africa (ICASA) approved the merger in November 2022.
Vodacom argued that the merger would help bridge South Africa’s digital divide by expanding fibre connectivity in underserved communities. As part of the deal, Vodacom committed to investing over R10 billion ($565.5 million) in fibre infrastructure over five years, primarily in low-income areas. This investment aimed to pass over one million new homes with fibre connections, particularly in under-resourced areas. The telecom giant also planned to create up to 10,000 jobs, allocate R300 million ($17 million) to small business development, and extend free high-speed internet access to over 600 nearby schools and police stations.
However, the Tribunal determined that the transaction would consolidate Vodacom’s position as South Africa’s largest mobile operator with a dominant role in the fibre infrastructure market, potentially harming competition. The ruling followed detailed testimony from several competitors, including MTN, Telkom, and Rain, as well as the Department of Trade, Industry and Competition (DTIC).
Competitors expressed concerns that the merger would disadvantage smaller internet service providers, making it harder for them to compete fairly in the market. Economic experts, representing the Competition Commission, also provided insights on the merger’s potential impact on market dynamics, supporting the Tribunal’s decision.
The ruling has substantial implications for South Africa’s fibre expansion goals. Remgro, which holds a 57% stake in CIVH, indicated that without Vodacom’s financial support, Vumatel’s goal to expand affordable fibre connectivity in South African townships could face prolonged delays.
