Competition watchdog says no to the Vodacom, Vumatel deal.
By Lehlohonolo Lehana.
The Competition Commission has recommended that mobile operator Vodacom's acquisition of a stake in fibre operator Maziv be blocked.
Maziv's main assets include Vumatel, South Africa's largest fibre-to-the-home operator.
The commission, which has taken a considerable amount of time to investigate the transaction, has recommended that the deal be blocked on competition concerns.
Under the deal, Vodacom was going to contribute its fibre assets to the merged entity, which would have made its infrastructure available on an open-access basis to internet service providers. It had been expected the deal would be approved, but with customary conditions.
The decision by the commission to block the deal will send shockwaves through the local telecoms industry, which had expected a wave of consolidation on the back of it. It also throws a big spanner in the works for Remgro, the largest shareholder in Maziv shareholder CIVH, which had seen the Vodacom transaction as a way of dealing with the company's debt.
Justifying its decision, the commission on Tuesday said, that it is "of the view that the proposed transaction is likely to substantially prevent or lessen competition in several markets and that the conditions offered do not fully address the resultant harm to competition".
"Further," it said, "the public interest commitments provided by the merger parties do not outweigh the competition concerns."
The Competition Tribunal will now adjudicate whether the deal can go ahead.
In a statement on Tuesday, Vodacom said it was "surprised and disappointed" with the Competition Commission's recommendation.
"Though we are disappointed, it is important to note that the Competition Commission’s recommendation is not the end of the process. Instead, the next step is for the proposed transaction to be presented to the Competition Tribunal."
Vodacom said it intended to "showcase the strong public interest and pro-competitive advantages" that the proposed transaction would have on the fibre market, and the country as a whole.
"Vodacom's planned investment 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."