SA competition regulator says no to Vodacom’s acquisition of fibre operator Maziv

South Africa’s competition regulator has rejected Vodacom’s acquisition of Maziv, a holding firm which owns Dark Fibre Africa, the nation’s second-largest fibre community operator.

The competition fee of South Africa has beneficial towards Vodacom’s acquisition of Maziv, a holding firm whose property embody fibre community operators Dark Fibre Africa (DFA) and Vumatel.

“The Commission is of the view that the proposed transaction is likely to substantially prevent or lessen competition in several markets and that the conditions offered do not fully address the resultant harm to competition,” the regulator mentioned in an announcement.

Additionally, the fee said that the general public curiosity commitments supplied by the merger events didn’t outweigh the competition considerations.

Areas of concern

The fee outlined that the transaction is probably going to have an effect on each horizontal and vertical competitiveness available in the market. From a horizontal perspective, the fee’s investigation exhibits that 5G Fixed Wireless Access (FWA) and fibre compete in the identical related market and that customers stand to profit from growing aggressive rivalry between FWA and fibre. 

“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. The Commission’s investigation has shown that fibre players tend to reduce prices in areas where more than one fibre network provider has deployed fibre. This price competition is lost with the merger,” it said.

Another consideration was the pre-merger plans of each Vodacom and Maziv. Vodacom, by its spectrum allocation obligations, and Maziv, by its deliberate Vumatel roll-out plans, are each investing in infrastructure rollout to goal underserved low-income and extra rural shoppers. According to the fee, a merger transaction is probably going to cut back this aggressive rivalry and deprive low-income shoppers of the advantages that fastened competition exerts on cell merchandise as presently loved by wealthier and concrete shoppers in South Africa.

From a vertical perspective, the regulator cited considerations about the truth that

cell community operators (MNOs) depend on Maziv to a various however important diploma for fibre backhaul and metropolitan connectivity providers to present cell retail providers. The merger would create the flexibility and (elevated) incentive to partially foreclose or in any other case drawback rival MNOs to Vodacom.

In its conclusion, the regulator said that there are no important advantages arising from the proposed merger that aren’t already independently deliberate prior to the merger or not already in place. Additionally, the merger was deemed probably to additional reinforce the incentives for self-preferencing and discriminatory behaviour.

What is attention-grabbing is that in November final 12 months, South Africa’s communications regulator greenlighted Vodacom’s acquisition of DFA’s working licenses by Vodacom. In November 2021, Vodacom introduced that it could shell out R6 billion ($337.5 million) in money, and fibre property valued at R4 billion for a 30% stake in Maziv, which held DFA’s fibre property.

The fee’s resolution is probably going to derail Vodacom’s plans to have a major headstart within the battle for fibre dominance, which regarded to be heading in the right direction after MTN’s acquisition of Telkom fell by. A powerful fibre community will be certain that Vodacom can be in a position to help its personal push for 5G, in addition to lease out its community to different operators for his or her 5G providers.