Vodacom’s R13.2-billion deal to buy Vumatel — Competition Commission answer expected in days
Remgro strategic investments head Pieter Uys says they are confident the Competition Commission will issue a recommendation on Vodacom’s proposed deal to acquire a co-controlling stake in CIVH for around R13.2 billion.
Uys was responding to questions during Remgro’s results call for its half-year results.
He explained that they submitted the deal to telecommunications industry regulator Icasa and the Competition Commission in November or December 2021.
“It’s been there now for 15 months,” Uys stated. Remgro initially expected the deal to take between 12 and 18 months to conclude.
Icasa gave its conditional approval around a year after the deal was announced.
“We are confident that by month-end, the Competition Commission will be able to recommend to the Tribunal, which normally takes another few months,” Uys said.
Therefore, Remgro expects an answer from the Competition Commission within eight days.
The Competition Commission recommends to the Competition Tribunal whether to approve or reject transactions and whether to set conditions if approving a deal.
Asked what conditions Icasa set on the transaction, Uys said it was mainly around remaining open access — which was their plan from the beginning.
Open access means the combined Vodacom, Vumatel, and DFA fibre network must provide wholesale services to third-party Internet service providers like Afrihost and Cool Ideas.
Icasa also set conditions for Maziv to provide transparent tariffs and rollout plans to the market.
“This is so the market can see where we roll out, so we don’t, for example, favour Vodacom after the acquisition,” Uys said.
Uys said they also had to make regular commitments, such as maintaining a Black Economic Empowerment shareholding of above 30%, which they currently have.
He said there is also usually a moratorium on retrenchments for a time after a big merger or acquisition.
Vodacom and CIVH announced their proposed deal on 10 November 2021.
Under the terms of the deal, Vodacom will own a 30% stake in Maziv for a total purchase consideration of around R13.2 billion.
Although Vodacom will have a minority stake, it will co-control the company.
The deal includes an initial cash consideration of R6 billion, Vodacom’s fibre assets worth R4.2 billion, and a secondary purchase estimated to be approximately R3 billion.
The R3 billion is based on Maziv’s growth in valuation from the date Vodacom and CIVH signed the agreement to the deal’s closing date.
Vodacom has the option to acquire an additional 10% stake in FibreCo to increase its shareholding to 40%.
The Internet Service Providers’ Association of South Africa lodged an objection against the deal with the Competition Commission.
However, the objection is conditional — it asked for a commitment from Vodacom and CIVH that the Vumatel and DFA fibre networks will remain open access.
The companies have already committed to the open access model and announced that Vodacom’s fibre network would immediately become open access once integrated into Maziv’s infrastructure.
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