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In a surprising move, the South African Competition Tribunal has blocked Vodacom’s proposed merger with fibre provider Maziv, a decision that Vodacom described as “deeply disappointing.” Both companies await a detailed explanation from the Tribunal and may consider appealing the decision to the Competition Appeal Court.
The ruling follows a recommendation from the Competition Commission, which had advised against the merger, citing concerns over its potential impact on competition within South Africa’s telecom sector. This decision comes despite initial approval from the Independent Communications Authority of South Africa (ICASA) in November 2022.
Vodacom had argued that the merger would significantly enhance digital accessibility across South Africa by expanding fibre connectivity in underserved areas. As part of the proposed deal, Vodacom committed to investing more than R10 billion (approximately $565.5 million) in fibre infrastructure over the next five years, primarily targeting low-income communities. This investment was set to connect over one million homes, support 10,000 jobs, allocate R300 million ($17 million) toward small business development, and provide free high-speed internet to more than 600 schools and police stations in nearby areas.
However, the Tribunal determined that the merger would further solidify Vodacom’s position as South Africa’s largest mobile operator, potentially creating an uncompetitive environment in the fibre infrastructure market. Testimonies from competitors, including MTN, Telkom, Rain, and insights from the Department of Trade, Industry, and Competition (DTIC), highlighted concerns that the merger could hinder smaller internet service providers, restricting fair competition in the market.
Economic experts and analysts, representing the Competition Commission, also shared findings indicating that the merger might negatively affect market dynamics, ultimately supporting the Tribunal’s decision to block the deal.
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