It is not the end of the road for Vodacom and Maziv to merge, the companies said, noting that they will approach the Competition Tribunal to argue for approval.
This after the Competition Commission announced on Tuesday that it was recommending the proposed merger to be prohibited.
The proposed merger was shot down by the commission after it said it raises several competition concerns.
“From a horizontal perspective, the commission’s investigation shows that 5G fixed wireless access [FWA] and fibre compete in the same relevant market and that consumers stand to benefit from increasing competitive rivalry between FWA and fibre,” it said in a statement.
“The proposed merger will result in the loss of direct competition between Vodacom and Maziv in the areas where both Vodacom and Maziv have deployed fibre.”
Remgro-owned Community Investment Ventures Holdings (CIVH) and Maziv, the parent company of two fibre network operators Vumatel and Dark Fibre Africa, said in a joint statement that the commission’s recommendation was not the end of the process.
“The parties will now approach the Competition Tribunal to present evidence and argue for approval of the merger. CIVH remains committed to the transaction,” said the statement.
“We firmly believe that the transaction will deliver substantial benefits to both the South African consumer and the economy.
“Vodacom’s planned investment in excess of R10-billion holds particular significance as a considerable proportion will be focused on developing new fibre infrastructure at a time when attracting capital investment is particularly challenging.”
The commission’s investigation has shown that fibre players tend to reduce prices in areas where more than one fibre network provider has deployed fibre.
“This price competition is lost with the merger. Importantly, the proposed merger is also likely to result in the prevention or lessening of future competition in relation to fibre and 5G FWA.
“Both Maziv and Vodacom have significant pre-merger plans to expand coverage, particularly in underserved low-income areas,” said the commission.
CIVH and Maziv said the merger will benefit the market by extending fibre infrastructure to an estimated 1-million new households in lower income areas and create up to 10 000 new jobs while committing to at least R10-billion to capital expenditure.
The merger, they added, would facilitate the creation of small to medium enterprises through a fund formed specifically for the purpose with R300-million of committed capital.
“During the commission’s investigation, which lasted more than 18 months, both merger parties committed to extensive and robust engagement with the commission,” said CIVH and Maziv in a statement.
“We believe that all concerns raised by the commission during this process can be adequately addressed by a range of conditions and commitments proposed by the parties.
“While we have not had the opportunity to study the commission’s reasons in detail, we are confident that the massive positive impact of the proposed transaction on critical issues like the democratisation of the internet in lower income areas, as well as growth of the economy will be favourably considered by the Competition Tribunal.
“CIVH remains committed to achieving approval of the proposed transaction.”
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