Vumatel parent CIVH and CIVH controlling shareholder Remgro are prepared to make more concessions to the competition authorities to get a R10.2-billion deal with Vodacom across the line.
That’s according to Pieter Uys, a senior executive at Remgro who also serves as chairman of CIVH, the largest shareholder in Maziv. Maziv is the newly created parent company of both Vumatel, South Africa’s largest home fibre broadband provider, and Dark Fibre Africa, which provides fibre to business clients, including the country’s mobile operators. Vodacom agreed to buy 30% of Maziv for R6-billion in cash. It will also contribute R4.2-billion in fibre network assets to Maziv.
But Uys remains hopeful that the deal will get approved by the Competition Commission, despite the decision earlier this week by the Competition Commission to seek to block it at the Competition Tribunal.
The commission’s decision came as a surprise to the companies involved; they had expected it to be approved with conditions. Uys told TechCentral on Thursday that the parties are willing to propose and agree to further conditions to get the deal concluded successfully.
“There are no concerns that have been raised in the past 18 months that cannot be solved through obligations and conditions. I am positive we are going into a process that is more interactive and structured,” he said of the tribunal’s work.
He said that although Maziv doesn’t need the capital injection from Vodacom, the billions of rand that South Africa’s largest telecommunications operator will inject into it will dramatically accelerate Vumatel’s ambition to connect underserviced areas, including townships, with uncapped fibre internet. He said the business will be able to achieve in three to four years what it would take it a decade if the Vodacom investment were to be scuppered. Vodacom has agreed to buy a 30% co-controlling stake in Maziv, with the option to take that to 40%.
Maziv capital injection
“This started pre-Covid when CIVH realised that if we want to execute fully on our strategy, we need more capital injected into the business,” Uys aid, adding that there was some international investor interest, but that this evaporated when Covid hit in early 2020. That was followed by talks with several local entities, including Vodacom.
“In the end, Vodacom agreed to many of the conditions we had for an investor to come in,” he said. “We wanted financial backing behind our strategy; we don’t have unlimited pockets.”
He emphasised that Vodacom will not drive Maziv’s strategy, and the business will continue to be operated independently. There’s also the commitment by Vodacom that all the fibre assets it’s contributing to Maziv under the deal will be available following conclusion of the transaction on an open-access basis, meaning, in effect, customer choice of service providers.
Uys said the tribunal will be provided with greater clarity on the importance of open access and why it helps overcome competition-related concerns raised by the commission.
The Competition Commission also cited concerns over continued investment in 5G fixed-wireless access and fibre, suggesting there’d be greater investment in these areas without the deal between Vodacom and Maziv.
But Uys has disputed this, saying there have been no changes to either company’s investment plans in 5G and fibre. “This is not a merger,” he said. “Fibre is better for certain things; mobile is better for other things. There are still spectrum constraints with 5G. If you want world-class, affordable and uncapped internet, you need a fibre link into the customer’s premises.”
What happens next? The Competition Tribunal now has 10 days to convene a first meeting at which it will appoint chairman to lead and facilitate the proceedings, Uys explained. The various parties will appoint senior counsel, while interested third parties will be invited to participate. The tribunal will then publish the dates for a hearing.
Uys said he is not hopeful the process will be wrapped up much before early 2024.
“I do not see anything that cannot be overcome… If we sit down [with the tribunal], we can come up with something… There is nothing in there that cannot be solved, and we are willing and able as Maziv and Vodacom to suggest and agree to further obligations.”