Monopoly watchdog grants MTN and Rain intervention rights in Vodacom-Vumatel deal hearing
The Competition Tribunal has granted MTN and Rain leave to intervene in the pending hearing about a proposed transaction between Vodacom and Maziv.
Maziv owns Vumatel and Dark Fibre Africa.
“MTN and Rain are competitors and customers of the merging parties, with Rain also being a supplier,” the Tribunal stated
“Both applied to the Tribunal for participation rights in the pending merger proceedings, and a hearing in this regard was held on 10 November 2023.”
MTN had said that although it broadly favours consolidation in South Africa’s telecommunications sector, it wanted to provide input to ensure the conditions Vodacom and Maziv agreed to for the deal to proceed were appropriate.
Advocate Robin Pearse, representing MTN, told the Tribunal that the operator would be unable to compete with Vodacom unless conditions were placed on the companies.
The Tribunal’s order in respect of MTN grants it leave to intervene as a participant in the merger proceedings in respect of the following matters:
- Whether or not the proposed merger is likely to substantially prevent or lessen competition
- The conditions offered by the merging parties and considered by the Tribunal
Rain warned the Tribunal that Vodacom could influence Maziv to share confidential information, offer competitors inferior service terms, and prioritise Vodacom’s infrastructure rollout over others.
Like MTN, Rain doesn’t necessarily want to oppose the deal but would like to ensure suitable conditions were placed on the two companies.
The Tribunal’s order in relation to Rain grants it leave to intervene as a participant in the merger proceedings on the following matters:
- Whether or not the proposed merger is likely to substantially prevent or lessen competition in relation to the following theories of harm:
- The effect of the proposed merger on Rain’s ability to compete in retail Internet services and mobile services as a result of portfolio effects and bundling
- The risk and potential effects of input foreclosure, reduction in competition in wholesale markets (including metro fibre backhaul used for mobile networks), and open access to fibre infrastructure and services
- Information sharing
- Whether the proposed merger should be approved (with or without conditions) or prohibited, including whether any conditions offered by the merging parties to the Tribunal adequately address any anti-competitive consequences of the proposed merger and conditions to be considered by the Tribunal
The Competition Tribunal’s intervention applications hearing is a precursor to the final hearing on the proposed transaction between Vodacom and Maziv, tentatively set for 20 May 2024.
The proposed deal, if approved, will see Vodacom take a 30% stake in Maziv in exchange for at least R9 billion in cash and fibre assets to the value of R4.2 billion.
The fibre assets would comprise Vodacom’s residential, business, and tower fibre infrastructure. However, it excludes Vodacom’s long-distance network.
The companies have assured that Vodacom’s fibre network would become open access as it would adopt the same wholesale model as Vumatel and DFA.
Remgro head of strategic investments Pieter Uys told MyBroadband that the merger between Maziv and Vodacom would significantly speed up its fibre rollout to underserved areas.
While Vumatel could continue deploying infrastructure without the additional investment, a national rollout would take approximately ten years to complete.
However, Vodacom’s investment could cut the timeframe to three years.
While the Independent Communications Authority of South Africa approved the deal, the Competition Commission raised several red flags and recommended against it being approved.
The Competition Tribunal will now consider the case and the Competition Commission’s input to decide if the deal should be approved.