Big announcement from Vodacom and Vumatel

Vodacom and Vumatel owner Community Investment Ventures Holdings (CIVH) have filed a notice to appeal against the Competition Tribunal’s prohibition of a deal between the two companies.

Remgro, which has an effective 57% stake in CIVH, and Vodacom announced the development in a notice to shareholders on Tuesday.

“We are still awaiting the Competition Tribunal’s detailed reasons for prohibiting the transaction,” the companies stated.

They said their notice to appeal will be supplemented once they have received the Tribunal’s reasons.

The deal between Vodacom and CIVH could see the companies pool their fibre networks, with Vodacom owning a 30% to 40% stake in the combined entity, Maziv.

Vodacom had offered a combination of assets and cash of at least R13.2 billion for a 30% shareholding.

That included an initial cash consideration of R6 billion, Vodacom’s fibre assets worth R4.2 billion, and a secondary purchase based on CIVH’s valuation when the deal went through, estimated to be roughly R3 billion.

Vodacom also had the option to increase its stake to 40%.

The Tribunal announced its decision to block the deal in October after an extensive hearing that took place over 26 days between 20 May to 27 September 2024.

That was after the Competition Commission took 20 months to consider the deal, including back-and-forth negotiations with the parties over conditions to attach to the transaction to address anti-competitive concerns.

Despite the extensive process, the Commission recommended to the Tribunal in August 2023 that the deal not be approved.

The Tribunal then conducted weeks of public hearings, which concluded at the end of September.

Remgro has warned that without Vodacom’s investment, Vumatel’s initiative to roll out fibre to South African townships would face significant delays.

Vumatel commercially launched its Vuma Key service in Alexandra and Kayamandi in mid-September, offering uncapped fibre services from R99 per month.

Remgro CEO Jannie Durand previously stated that, had the Vodacom deal been approved 18 months ago, CIVH would have already invested an additional R3 billion to R4 billion in its fibre networks — most of that in townships.

Pieter Uys, Remgro’s head of strategic investments, previously told MyBroadband that with Vodacom’s cash injection, Vumatel would be able to roll out to most of South Africa’s townships in 3–5 years.

Without the investment, that time horizon balloons to 10–12 years.

This is because Vumatel’s balance sheet is tapped out. CIVH currently has around R20 billion in debt, most of which belongs to Vumatel.

The company either needs a cash injection, or it needs to focus on sweating its assets like MetroFibre to pay down some of its debt.

Therefore, Vumatel would first need to generate profit from its existing customer base to reinvest in building township fibre rather than roll it out with borrowed money.