Vodacom Group fibre deal on hold after competition regulator intervenes

Vodacom Group fibre deal on hold after competition regulator intervenes

Service provider Vodacom’s plans to buy two fibre operators have been blocked by South Africa’s Competition Commission, which says it has found no major benefits from the proposed transaction that were not already in existence.

The $696 million acquisition by the giant service provider would have brought Vumatel, the country's largest fibre-to-the-home (FttH) network operator, and Dark Fibre Africa, which provides fibre services in the country’s cities, into its orbit. The parent company of both firms is Maziv, a unit of South African conglomerate Remgro, an investment holding company with diverse interests.

The Competition Commission said it felt that the proposed merger would result in the loss of direct competition between Vodacom and Maziv in the areas where both have deployed fibre, offering an incentive for self-preferencing and discriminatory behaviour. That judgement also seems to imply that price competition would suffer and there might thus be less benefit to underserved low-income and rural consumers, especially in relation to 5G FWA.

This isn’t just about the Competition Commission’s opinion, however. Local news reports suggest that a number of ISPs also felt such a deal would result in unfair competition.

While many commentators believed there would be some conditions attached, the general opinion seems to have been that the deal, under which Vodacom was going to contribute its fibre assets to the merged entity, which would have made its infrastructure available on an open-access basis to internet service providers, would go through.

Vodacom is reportedly "surprised and disappointed" with the recommendation, though it correctly points out that the next – and probably final – step is for the proposed transaction to be presented to the country’s Competition Tribunal, where Vodacom plans to showcase what it says are the strong public interest and pro-competitive advantages of the deal.

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