South African Regulator Advises Against Vodacom Group’s $696 Million Fiber Deal, Appeal Expected

Vodacom Group Ltd’s intended $696 million acquisition of two fiber operators in South Africa faces a hurdle as a local antitrust watchdog recommends blocking the deal, prompting Vodacom’s plan to appeal the decision.

Vodacom, the largest wireless provider in South Africa, aimed to acquire Vumatel, the country’s prominent fiber-to-the-home network operator, and Dark Fibre Africa, a fiber services provider in urban areas. Both firms are under the ownership of Maziv, a unit of the South African conglomerate Remgro.

However, the proposed deal encountered opposition from internet service providers (ISPs) who claimed that it would lead to an unfair competitive landscape.

The Competition Commission, in a statement issued late on Tuesday, articulated that the proposed acquisition held no significant advantages that were not already present and recommended its prohibition.

The commission pointed out that the merger could potentially exacerbate self-preferencing and discriminatory practices, adding, “The proposed merger will result in the loss of direct competition between Vodacom and Maziv in the areas where both Vodacom and Maziv have deployed fibre.”

Their investigations revealed that regions with multiple fiber network providers tend to witness price reductions, which would be compromised if the merger goes ahead.

South African mobile companies, including Vodacom, are in a race to expand their wireless infrastructure to leverage the growing popularity of smartphones for various activities like entertainment, banking, and online shopping.

Responding to the Commission’s recommendation, Vodacom expressed surprise and disappointment, underlining that the recommendation is not the final verdict. The decision-making process will proceed to the Competition Tribunal, an entity with the ultimate authority to make the final decision. Vodacom intends to present the transaction’s public interest and pro-competitive advantages in front of the Competition Tribunal, emphasizing its potential positive impact on the fiber market and the nation as a whole.