The South African Competition Commission has conditionally sanctioned the acquisition of Octotel, a local fibre network operator, by a consortium led by African Infrastructure Investment Managers (AIIM). The consortium also includes STOA, a French infrastructure and energy investor, and Thebe Investment Corporation, a South African investment firm. This approval is for the purchase of Octotel from Actis, an investment firm based in the United Kingdom.
The approval comes after Octotel experienced significant growth since Actis first invested in the company four years prior. In March 2024, Actis made a public announcement regarding its agreement to sell Octotel to the AIIM-led consortium, with the completion of the deal contingent on receiving the necessary regulatory consents.
In its decision to approve the transaction, the Competition Commission expressed its belief that the proposed acquisition is unlikely to cause a substantial reduction or obstruction of competition within the telecommunications infrastructure sector.
To mitigate potential employment concerns, the Competition Commission has stipulated that the newly merged entity must refrain from laying off any employees due to the merger for a period of two years from the date the merger is finalized.
In a related development, the consortium has also agreed to purchase a minority shareholding in RSAWeb, an Internet service provider. This secondary transaction is subject to the fulfillment of standard regulatory approvals and the satisfaction of closing conditions.
The recent conditional approval by the South African Competition Commission for the consortium’s acquisition of Octotel follows closely behind another significant transaction by Actis. The UK-based investment firm announced its purchase of Swiftnet, the masts and towers business of Telkom, for R6.75 billion (approximately $374.3 million). This deal, too, has received the green light from the Competition Commission.
Back in December 2020, Actis made a strategic move by acquiring a majority stake in Octotel for R2.3 billion (around $128.5 million), aiming to capitalize on the burgeoning demand for high-speed internet connectivity and the surge in data usage within South Africa.
Actis’s investment approach focused on expanding Octotel’s fibre network to more homes and enhancing the uptake of its services. This approach has evidently paid off, as evidenced by the substantial growth in the company’s metrics. The number of homes with access to Octotel’s fibre network soared to 350,000 from an initial count of 195,000 at the time of investment. Similarly, the customer base connected to the network doubled from 56,000 to 110,000 during the same timeframe.
The Competition Commission’s report on the full transaction structure reveals that the primary acquiring entity is under the control of STOA and IDEAS Infrastructure II GP (Pty) Ltd (IDEAS). IDEAS is a domestic private infrastructure fund that is managed by African Infrastructure Investment Managers (AIIM), a private equity fund manager. AIIM is ultimately under the control of Old Mutual, a well-established financial services group.
Trevor van Zyl, the Chief Executive Officer of Octotel, expressed enthusiasm about the new partnership with African Infrastructure Investment Managers (AIIM), STOA, and Thebe Investment Corporation. He remarked, “This collaboration with AIIM, STOA, and Thebe signifies a thrilling new phase for both Octotel and RSAWeb. United in our efforts, we are well-positioned to expedite our commitment to providing state-of-the-art connectivity solutions. This alliance is set to stimulate economic expansion and promote a culture of innovation throughout the region.”
