“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 in a statement on Tuesday.
“This would have been the case even if the commission were to have recommended the proposed transaction for the tribunal’s approval.”
In a statement earlier in the day, the commission said it recommended the deal not be approved on competition grounds. The deal had been expected to be approved, with customary conditions attached.
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. But the commission said the advantages that might bring are outweighed by the competitive disadvantages that a deal could result in.
“Looking forward to the process with the Competition Tribunal, Vodacom intends 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,” the company said.
“In Vodacom’s view, the proposed transaction will in fact help bridge the digital divide and enhance competition in the fibre market as the parties have made a firm commitment to ensuring access to Maziv’s fibre assets – including Vodacom’s fibre assets contributed as part of the transaction – will be made available through an open-access, non-discriminatory pricing model.”
It said the deal, if it happens, will “significantly propel South Africa’s social development and would be highly beneficial for the country, the economy and lower-income households”.
It said as part of the deal, Maziv agreed to invest more than R10-billion over five years to pass at least a million new homes, many of them in low-income communities, with broadband fibre.
“The investment by Vodacom, in excess of R13-billion into South Africa through this transaction, would come at a time when attracting capital investment is particularly challenging. This level of investment cannot be made by Maziv alone and is over and above Vodacom’s pledge at the recent SA Investment Conference to invest R60-billion over five years.”
“We firmly believe that the transaction will deliver substantial benefits to both the South African consumer and the economy. 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.”