Maziv chair Pieter Uys has criticised the Competition Tribunal’s decision to reject Vodacom’s proposed acquisition, describing it as a case of “justice delayed and justice denied.”

In a bold statement, Uys expressed disappointment with the ruling, emphasising its implications for business growth and market competition in South Africa.

The decision has sparked widespread debate, with stakeholders weighing in on its potential impact on the telecoms sector.

Speaking to Business Times, Uys said the decision undermines government assurances to investors that South Africa is “open for business.”

“This is not the message we want to send out to the world. The president [Cyril Ramaphosa] stands up every year and says he’s calling industry to commit to infrastructure investment. This is a perfect example of infrastructure investment, and the public interest benefits we’ve committed to make it a no-brainer,” he said.

Adding to the concerns, Uys highlighted the protracted delays in the competition authorities’ review process. Submitted to the Competition Commission three years ago, the deal faced extensive delays before the Commission recommended in August 2023 that the Tribunal prohibit the merger.

The Tribunal ultimately blocked it at the end of October, following a six-month hearing.

“To leave companies that want to invest billions in the country in limbo for three years like the competition authorities did, is just too long, it’s unacceptable,” Uys remarked, noting the Commission sent “at least 16 requests for information” before its recommendation.

The proposed R13 billion deal would have given Vodacom a 30% stake in Maziv, with an option to increase it to 40%. The partnership aimed to pool resources to bring fibre to underserved townships and rural areas, a move Uys described as essential for democratizing internet access in South Africa.

GUGU LOURIE: Blocking Vodacom-Maziv deal could widen digital exclusion

BL Premium

31 October 2024 – 05:00

by Gugu Lourie

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.

Vodacom-Maziv: A Contrarian View

What’s more, the claim that Vodacom suddenly wants to provide affordable broadband for rural South Africans rings hollow.

By Paul ColmerNovember 6, 202406 Mins Read

Paul Colmer, Exco member at Wireless Access Provider’s Association (WAPA)

Ever since the news broke last week that Vodacom, South Africa’s largest cellular network operator, had its bid to buy fibre network operator Maziv blocked by the Competition Commission, we’ve been inundated by sob-stories of how this “setback” will “widen digital exclusion” in the country’s rural and underserviced areas.

To be direct: digital exclusion isn’t an issue in rural areas. Some of these communities are well served by smaller wireless data operators – it’s just that the large cellular providers with extensive coverage and with high pricing models aren’t one of them, and have created that exclusion.

WAPA (the Wireless Access Providers Association) applauds the recent decision by the Competition Commission, which we believe is in the interest of consumers getting a fair price for their broadband internet connection. The idea that blocking the Vodacom-Maziv deal is a setback for the entire industry is complete nonsense. It is only a setback for the companies involved in the deal.

A monopoly in the making

To understand why concerns about “underserved communities” may be more about marketing than substance, let’s take a closer look at recent history.

Vodacom, launched in 1994, rose to the top of the telecoms industry in South Africa, building a behemoth network primarily fuelled by voice traffic revenue. As data overtook voice as the primary traffic on these networks, the shift brought in increased profit margins.

Vodacom’s 30-year legacy and significant head start have allowed it to dominate the market, and its CEO, Shameel Joosub, has been with the company from the start. A Harvard grad with a near-decade-long CEO tenure, Joosub has steadily pushed Vodacom towards deeper market consolidation.