According to BMA sources, South African mobile operator MTN is taking a neutral stance in its rival Vodacom’s bid to merge with fibre infrastructure company Maziv.
This is as the Competition Tribunal continues to hear evidence from factual and expert witnesses this week regarding the proposed merger between Vodacom and Maziv.
The hearings followed the Competition Commission in August, which recommended prohibiting the proposed merger.
According to the competition watchdog, the proposed deal will likely substantially prevent or lessen competition in several markets, and the conditions offered will not fully address the harm to competition.
Under the deal, Vodacom wants to acquire a 30% stake in the newly created Maziv, with an option to increase the stake by 10%.
Maziv was created last year by Remgro-owned Community Investment Ventures Holdings (CIVH) after it folded Vumatel and DFA into one giant fibre infrastructure company.
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While the local fibre players expected the consolidation of the market, some smaller players expressed fears that the merger would stifle competition.
Using a combination of approximately R4.2 billion in assets and cash of at least US$332 million, Vodacom is looking to acquire up to 40% of Maziv’s ordinary shares.
CIVH and Vodacom argue the transaction will benefit the market by making Vodacom fibre assets commercially available on an open, transparent, and non-discriminatory basis.
In addition, they note, the investment will enable Maziv to extend fibre infrastructure to an estimated one million new households in lower-income areas, create up to 10,000 new jobs, commit at least US$554 million to capital expenditure, and facilitate the creation of small to medium enterprises through a fund formed specifically for this purpose.
According to the operator, MTN believes the investment in South Africa’s fibre network infrastructure is positive and that industry consolidation is an inevitable and desirable feature of the national and international landscape.
“MTN is not opposing the merger, nor does it support prohibiting the proposed Vodacom-Maziv merger. Where there is market consolidation, scrutiny is required to ensure that there is no substantial harm to competition. If material concerns of anti-competitive conduct arise, these should be sufficiently mitigated by comprehensive, effective, monitorable conditions,” says MTN South Africa CEO Charles Molapisi.
“We confirm that we are participating in the Competition Tribunal’s merger proceedings in the Vodacom and Maziv transaction.”
Molapisi notes that, during its investigation of the proposed merger, the Tribunal contacted MTN to request information and solicit its views on the proposed merger in accordance with standard practice.
“We have made concern submissions, and MTN’s scope of participation in the merger proceedings concerns three topics – the competitive effects of the proposed merger, market definition and potential remedies in the event of conditional approval.
“We are of the view that the final approach taken by the Competition Tribunal may set a precedent for how other merger applications will be assessed, which, depending on the outcome, may pose a challenge to future desirable consolidation in the market.
“We believe that our participation in the merger proceedings will assist the Competition Tribunal in adjudicating the proposed merger and establish a sustainable framework to govern such transactions in the future,” Molapisi says.
