Vodacom, Vumatel deal heads for big fight at Competition Tribunal

South Africa’s Competition Tribunal has set 20 May 2024 as the date for the final hearing regarding a proposed transaction between Vodacom, and Vumatel’s parent company Maziv.

Remgro head of strategic investments Pieter Uys provided an update on the expected timeline for the Competition Tribunal’s assessment of the transaction at the company’s annual results presentation on Thursday.

Johann Rupert’s investment holdings company owns 57.03% of Community Investment Ventures Holdings Limited (CIVH), which owns Vumatel and Dark Fibre Africa (DFA).

Vuma and DFA’s assets have been spun out into a wholly-owned subsidiary of CIVH called Maziv in preparation for the deal.

The proposed transaction involves Vodacom taking a 30% stake in Maziv in exchange for at least R9 billion in cash and fibre assets valued at R4.2 billion.

The cash consideration includes a fixed R6 billion, with a variable portion depending on Maziv’s valuation when the deal goes through.

Vodacom’s fibre assets that would be added to Maziv’s stable include its residential, business, and tower fibre infrastructure. It excludes Vodacom’s long-distance network.

Both companies have assured that Vodacom’s fibre network would immediately become open access, adopting the same wholesale model as Vumatel and DFA.

Uys recently told MyBroadband that Remgro was only looking for an investor for Maziv to help speed up its fibre rollout to underserved areas like Alexandra.

He explained that while Vumatel could continue deploying infrastructure without the additional investment, it would take ten years to complete a national rollout.

With Vodacom’s investment, they could reduce that timeframe to three years.

This was because Maziv’s debt already stood at over R18 billion — most of which belonged to Vumatel.

Uys said they had initially spoken to international investors, but they walked away from negotiations at the start of the Covid-19 pandemic.

The Independent Communications Authority of South Africa approved Vodacom and Maziv’s proposed transaction.

However, the Competition Commission raised several red flags and recommended against the deal being approved.

The next step is for the Competition Tribunal to consider the case, including the Competition Commission’s input, and decide whether the transaction should be allowed.

Uys explained that the Tribunal will also hold hearings to consider feedback from those who might raise further concerns or object to the deal.

“There are third parties that could possibly intervene next, and we should hear what they have to say by 10 November,” Uys said at Remgro’s annual financial results presentation on Thursday.

He said that depending on how many interveners there are, the final hearing date should be 20 May 2024.

As for what the chances are that the Competition Tribunal would go against a recommendation from the Commission, Uys’ co-director on the Remgro investment portfolio, Craig Caesar, said it does happen.

“There have been nine to ten such cases, of which two were large mergers,” Caesar previously told MyBroadband.

Now read: Behind the scenes at Vumatel’s uncapped fibre trial in Alexandra