SA’s digital connectivity expansion plans have been dealt a blow by the Competition Tribunal’s move to block Vodacom’s proposed acquisition of a stake in Maziv, the parent company of Vumatel and Dark Fibre Africa (DFA).

The tribunal’s move to prohibit the proposed acquisition puts the brakes on anticipated industry consolidation, which many industry experts believe is vital for driving digital infrastructure development in underserved areas.

This raises the question: how does the tribunal’s move assist in bridging SA’s digital divide? Did its obsession with market competition unwittingly stifle digital expansion progress?

The blocked R14bn deal wasn’t just another merger. Vodacom and Maziv had committed to a transformative investment plan, pledging to invest at least R10bn over five years primarily in low-income areas, connecting more than 1-million homes, creating 10,000 jobs and providing high-speed internet to more than 600 schools and police stations.

For Vodacom group CEO Shameel Joosub, the tribunal’s decision represents a missed opportunity. “SA desperately needs additional significant investment, especially in digital infrastructure in lower-income areas,” Joosub lamented. “Our investment of up to R14bn would have changed millions of lives and created thousands of jobs.”

So, what went wrong? The tribunal appears wary of the market power that Vodacom might wield with this deal, fearing that consolidation could lead to monopolistic behaviour that prices smaller players out of the market.

Advocates against the merger, including the Competition Commission’s Daniel Berger, argued that Vodacom’s acquisition would lead to “self-preferencing behaviour” and potentially stifle competition by making it difficult for smaller internet service providers (ISPs) to operate.

While concerns about market dominance and anticompetitive practices remain valid, it’s worth questioning whether blocking consolidation entirely serves the public interest. The move also raises eyebrows because experts suggest that prohibiting the Vodacom-Maziv deal might delay or even prevent critical infrastructure investments in communities that need it most.

SA has, unfortunately, been no stranger to the negative consequences of limited competition in telecommunications. Historically, major mobile networks charged exorbitant data prices that disadvantaged and, in some cases, excluded low-income consumers, thereby widening the country’s economic divide.