Maziv responds to regulator’s recommendation to block the R13.2-billion Vodacom-Maziv merger

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August 8, 2023
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2 min read

South African Competition Commission's recommendation preventing Vodacom from acquiring a strategic stake in Maziv has prompted responses from Community Investment Ventures Holdings (CIVH) and Maziv. 

In 2022, Community Investment Ventures Holdings (CIVH) created Maziv by combining its fibre assets, Vumatel and Dark Fibre Africa (DFA), into one massive fibre infrastructure company. 

In a statement, CIVH and Maziv claim the Commission's recommendation does not mark the end of the merger process. Consequently, they will approach the Competition Tribunal to present information and make their case for the merger's approval. 

In the early hours of Tuesday, the Competition Commission advised against approving Vodacom's purchase of a stake in fibre operator Maziv.

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Although it usually takes 12 to 18 months to complete these transactions, it took the Commission 20 months to investigate and give feedback.

The regulator says the proposed transaction would likely reduce or eliminate competition in several markets.

It also says it may deny low-income consumers the benefits South Africa's wealthier and urban consumers enjoy from fixed competition's favourable effects on mobile products.

The Commission states that most market participants have expressed opposition to the merger following its thorough investigation and consultation with them, which included mobile network operators (MNOs), fibre network operators, Internet service providers, and others.

However, Maziv and CIVH, in a statement, say the investment will allow Maziv to add fibre infrastructure to an estimated 1 million additional homes in low-income areas, generate up to 10,000 new jobs, commit at least R10 billion to capital expenditures, and support the establishment of small to medium-sized businesses through a fund established specifically for this purpose with R300 million of committed capital.

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In 2021, the companies submitted their R13.2-billion deal to the regulator. It includes an R6 billion upfront cash payment, an R4.2 billion valuation of Vodacom's fibre assets, and an R3 billion secondary purchase. 

Vodacom would pay the money for up to a 40% stake in Maziv, co-controlling the business despite only owning a minor stake.

Per the agreement, Vodacom and Community Investment Ventures Holdings (CIVH) would combine their networks to form a new company known as "Newco" or "Fibreco." But in 2022, CIVH revealed that the new business would be Maziv.

Following that, in 2022, the industry regulator, the Independent Communications Authority of South Africa (Icasa), gave its conditional approval.

Moreover, Maziv and CIVH say the deal will be advantageous for the market because it will make Vodacom fibre assets commercially available on an open-access, transparent, and non-discriminatory basis. 

The Commission's decision to block the deal is reportedly shocking to the local telecoms sector, which had expected a wave of consolidation.

It also throws a major wrench in the plans of Remgro, the largest shareholder in CIVH, which saw the Vodacom transaction as a way to address the company's debt.

She's autistic and interested in mental health and how technology can help Africans with mental disorders. Find her on Twitter @latoria_ria.
She's autistic and interested in mental health and how technology can help Africans with mental disorders. Find her on Twitter @latoria_ria.
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She's autistic and interested in mental health and how technology can help Africans with mental disorders. Find her on Twitter @latoria_ria.

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