Good news for Vodacom-Vumatel deal – MyBroadband

The Department of Trade, Industry and Competition, and mobile operators MTN and Rain have voiced their support for Vodacom’s proposed acquisition of a 30–40% stake in Maziv, subject to conditions.

This is according to Remgro’s head of strategic investments, Pieter Uys, who provided an update on the transaction during the company’s annual financial results presentation on Thursday.

Remgro holds a 57% stake in Community Investment Ventures Holdings (CIVH), which owns Vumatel and Dark Fibre Africa (DFA).

Maziv was established to house the fibre assets of Vumatel, DFA, and Vodacom for the purposes of the transaction.

Uys said they expect to know whether the Competition Tribunal will approve Vodacom’s proposed acquisition of a stake in Maziv by the end of October 2024.

The transaction has been nearly three years in the making, with CIVH and Vodacom announcing the proposed transaction in November 2021.

Under the terms of the deal, Vodacom will buy 30% of Maziv for a combination of assets and cash for at least R13.2 billion.

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 secondary purchase amount is based on the valuation of CIVH when the deal goes through.

Vodacom has the option to increase its stake to 40%.

While it will be a minority shareholder, its stake will give it co-control of Maziv.

The companies have explained that this is for Vodacom to ensure its rights are protected and any major strategic decisions require its approval.

For example, Maziv could not change strategic direction away from deploying fibre without Vodacom’s approval.

The companies submitted the transaction to the Competition Commission and the Independent Communications Authority of South Africa (Icasa) in December 2021. Icasa conditionally approved the transaction a year later.

However, after twenty months of discussions with the Competition Commission that yielded a host of conditions that would be attached to the deal, the regulator recommended against it going ahead in August 2023.

Following the Competition Commission’s objection, the Competition Tribunal set dates for public hearings regarding the transaction that began in May 2024.

Closing arguments are being heard on 27 September 2024.

Among the commitments the parties have made was that Vodacom’s fibre infrastructure would immediately become open-access upon the conclusion of the transaction.

They also agreed to conditions around ensuring that neither party would give each other preferential treatment.

There have been particular concerns in South Africa’s telecommunications industry that Dark Fibre Africa could be incentivised to give Vodacom preferential treatment.

Uys said they have also made several other commitments that will be beneficial to the country, the economy, and lower-income households.

This includes creating up to 10,000 new jobs.

They will also prioritise SMME development by establishing a new enterprise and supplier R300-million development fund, and provide high speed Internet to nearby schools.

Crucially, they have commited to invest at least R10 billion and pass at least a million new homes in lower-income areas over a five-year period.