Maziv is a wholly-owned subsidiary of Community Investment Ventures Holdings. (Photograph by Lesley Moyo)
Vodacom and Maziv have today been interrogated by the Competition Appeal Court over why they had bothered to sweeten a potential merger if they were simultaneously appealing a 2024 decision by the Competition Tribunal prohibiting their multibillion-rand deal.
Advocate Jerome Wilson, appearing for Vodacom and Maziv, argued that the court should focus on the tribunal’s legal error in prohibiting a transaction initially valued at R14 billion (now R12.2 billion), rather than considering the improved set of conditions the parties recently agreed to with the Competition Commission.
The revised conditions were submitted after the tribunal in October ruled that the deal should be barred because it would likely prevent or lessen competition in several broadband markets, and that the conditions offered by the merging parties did not fully address potential harm to competition in the sector.
Wilson noted the merging parties were not asking the court for a “rubber stamp” of the recent Competition Commission agreement.
However, judge president Norman Manoim questioned why the merging parties had gone to the effort of submitting revised merger terms if their appeal was based solely on a legal challenge to the tribunal’s original decision.
Judge Dennis Davis echoed this, stating the absence of a formal application to admit the new conditions “compounds” and “suspends” the case. He added that the better argument would be that the revised conditions sufficiently address the tribunal’s original concerns around competition.
Wilson replied that the merging parties were not relying on the updated and “purely incremental” conditions, which were not before the tribunal. Instead, he said the tribunal had misdirected itself by incorrectly weighing public interest factors and concluding the deal would be anti-competitive.
Wilson noted that Maziv requires Vodacom’s capital injection to continue expanding affordable, high-speed internet to underserved communities. “We are dealing here with real-world outcomes,” he said.
The enhanced offer presented to the commission included, among other commitments, increased capital expenditure by Maziv, measures to promote competition between fibre-to-the-home and fixed wireless access, and assurances of competitive pricing. These changes led the commission to withdraw its opposition.
During the commission’s initial investigation, the Internet Service Providers’ Association, which has 204 members, raised concerns that the deal could undermine its members’ ability to provide internet access and related services.
Maziv is a wholly-owned subsidiary of Community Investment Ventures Holdings (CIVH), which is controlled by Remgro and owns both Vumatel and Dark Fibre Africa. Under the initial proposed deal, Vodacom would initially acquire a 30% stake in Maziv, with an option to increase this by a further 10%.
However, in an update to investors on Friday, Vodacom said it had agreed with CIVH to cap its shareholding at 34.95%. It explained that Maziv’s value would be R29.8 billion or R34 billion if Maziv did not declare a dividend of as much as R4.2 billion before the deal closed.
As a result, Vodacom’s investment would now amount to R12.2 billion.
One of the concerns raised during the 2024 tribunal hearings was that Vodacom’s stake would grant it substantial control over the merged entity.
