Vodacom has announced its intention to potentially appeal a decision by the Competition Tribunal that halted its plans to acquire a stake in Vumatel and DFA’s parent company through a mix of cash and assets.
Shameel Joosub, the CEO of Vodacom Group, expressed his surprise and disappointment regarding the Tribunal’s ruling. He emphasized the urgent need for substantial investments in South Africa’s digital infrastructure, particularly in low-income regions.
Joosub highlighted that Vodacom’s proposed investment of up to US$ 791 million had the potential to enhance the lives of millions and create thousands of jobs. He noted that Vodacom had addressed the concerns raised during the Competition Hearings by competitors and the Department of Trade, Industry, and Competition (DTIC) through various commitments and remedies.
During the Tribunal’s recent public hearings, the DTIC characterized the transaction as having significant positive implications for the public based on the assurances provided by Vodacom and Vumatel’s parent company, Community Investment Ventures Holdings (CIVH).
As part of the transaction, Vodacom offered assets and cash totalling at least US$746 million for a 30% stake in a newly formed entity called Maziv, which aimed to consolidate the fibre assets of Vumatel, DFA, and Vodacom. This package included an upfront payment of US$339 million, Vodacom’s fibre assets valued at US$237 million, and an estimated secondary purchase of approximately US$169 million, contingent on CIVH’s valuation at the time of the deal’s completion. Vodacom also had the option to increase its stake to 40%.
Remgro, which holds a 57% stake in CIVH, warned that without Vodacom’s investment, Vumatel’s plans to extend its fibre network to South African townships would encounter significant delays. The company had recently rolled out its Vuma Key service in Alexandra and Kayamandi, offering uncapped fibre for US$5.60 per month.
Remgro CEO Jannie Durand pointed out that had the Vodacom deal been approved 18 months earlier, additional investments between US$169 million and US$226 million would have been funnelled into fibre networks, primarily targeting townships. Pieter Uys, Remgro’s head of strategic acquisitions, stated that without Vodacom’s financial support, it could take between 8 to 10 years for Vumatel to reach all South African townships. With the cash injection from Vodacom, this period would be reduced to approximately 3 to 4 years.
Vumatel’s financial situation is strained, with CIVH carrying around US$1,1 billion in debt, predominantly linked to Vumatel. To alleviate some of its debt, the company needs external investment or must find ways to maximize its existing assets, such as MetroFibre.
Vodacom and Maziv are now awaiting the Tribunal’s detailed rationale for prohibiting the transaction to explore their next steps, which may include an appeal to the Competition Appeal Court. Maziv expressed disappointment with the ruling but stated it respects the Tribunal’s decision-making process.
