Competition authority blocks Vodacom's proposed merger with Maziv

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South Africa's Competition Tribunal blocked Vodacom's proposed merger with fibre group Maziv on Tuesday, a blow to the ambitions of the country's biggest mobile operator to expand its fibre footprint nationwide.

The proposed merger would have given Vodacom exposure to one of the country's largest fibre infrastructure players, while providing Maziv with the necessary capital to continue rolling out fibre, especially into lower income areas.

The Competition Tribunal, which makes the final ruling on deals, said in a statement that its reasons for the decision will be issued in due course.

In a statement, Vodacom, majority-owned by Britain's Vodafone, said it would wait to hear the Tribunal's reasons before considering all its options, which it added could include an appeal in the Competition Appeal Court.

"I am deeply surprised and disappointed by the Tribunal's decision," said Shameel Joosub, CEO of Vodacom Group. "South Africa desperately needs additional significant investment, especially in digital infrastructure in lower income areas.

Maziv and Remgro, which has a 57% stake in Community Investment Ventures Holdings, the parent company of Maziv, also said they were considering all the alternatives at their disposal.

Vodacom announced in 2021 that it would pay R6bn ($339m) in cash and in certain fibre assets valued at R4.2bn for a 30% stake in Maziv, the recently formed fibre holding company of Dark Fibre Africa and Vumatel.

But last year the Competition Commission recommended to the Tribunal that the proposed merger be prohibited on the grounds that it is likely to substantially prevent or lessen competition in several markets.

The Commission said the conditions offered by the merger parties did not fully address the resultant harm to competition.

Maziv had committed to capital expenditure of at least R10bn over a five year period, including rolling out fibre infrastructure past at least one million new homes in lower income areas over a five-year period.

The parties had also committed to creating up to 10,000 new jobs and establishing a 300 million rand enterprise and supplier development fund.

The Tribunal's decision follows an extensive hearing that took place over 26 days, where the merger parties, the Commission, government and rivals of Vodacom and Maziv argued for or against the deal.

($1 = R17.7024)

Article updated at 3.26pm