Vodacom-Maziv ruling defended

Wireless Access Provider’s Association (WAPA) exco member Paul Colmer supports the Competition Commission’s decision to block Vodacom’s bid to buy Maziv.

Colmer said that if Vodacom had succeeded in this deal, it would have created a monopoly, and poorer, rural South Africans would have suffered. 

His comments come after the Competition Tribunal issued an order prohibiting Vodacom’s investment in Vumatel and DFA-owner Maziv at the end of October.

The Tribunal’s decision to prohibit the merger followed hearings that lasted 26 days, from 20 May to 27 September 2024. 

Community Investment Ventures Holdings (CIVH) is one of Remgro’s key investments. The company is active in the telecommunications and information technology sectors.

Its operating companies are Dark Fibre Africa (DFA) and Vumatel, which construct and own fibre-optic networks.

Following an internal restructuring in 2023, DFA and Vumatel are held under Maziv, a newly formed wholly-owned subsidiary of CIVH, which is majority-owned by Remgro.

Vodacom planned to acquire up to 40% of Maziv through assets of R4.2 billion and cash of at least R6.0 billion.

However, this plan was stopped in its tracks when the Competition Tribunal blocked the deal, citing anti-competitive concerns.

Following this decision, several stakeholders have criticised the Competition Commission and Tribunal.

Many industry roleplayers have pointed out that this outcome will reduce investment in fibre infrastructure and significantly reduce the money flowing into fibre rollouts in South Africa.

They have also said it contradicts President Cyril Ramaphosa’s call for companies to invest in South Africa and his claim that the country is open for business.

Vodacom CEO Shameel Joosub said he was “deeply surprised and disappointed” by the Competition Tribunal’s decision.

“South Africa desperately needs additional significant investment, especially in digital infrastructure in lower-income areas,” he said.

“Our investment of up to R14 billion would have changed millions of lives and created thousands of jobs.”

Maziv said that it was disappointed by the outcome but that it respects the Tribunal’s process.

“We will await the reasons for the prohibition to consider our options and remain committed to driving innovation and economic growth through the power of connectivity,” it said.

Contrarian view

Unlike the Competition Commission’s critics, WAPA applauded this decision, saying it is in the interest of consumers to get a fair price for their broadband internet connection. 

“The idea that blocking the Vodacom-Maziv deal is a setback for the entire industry is complete nonsense. It is only a setback for the companies involved in the deal,” Colmer said.

He said claims that this decision will “widen digital exclusion” in the country’s rural and underserviced areas are misinformed.

“To be direct: digital exclusion isn’t an issue in rural areas. Some of these communities are well served by smaller wireless data operators,” he said. 

“It’s just that the large cellular providers with extensive coverage and with high pricing models aren’t one of them and have created that exclusion.”

He said concerns about “underserved communities” may be more about marketing than substance.

“This is, to put it bluntly, pure PR nonsense. Fibre simply doesn’t make financial sense in sparsely populated rural regions, where both the installation costs and potential subscriber pool render it unsustainable,” he said.

“What’s more, the claim that Vodacom suddenly wants to provide affordable broadband for rural South Africans rings hollow.” 

“Just two years ago, the company argued against the ‘data must fall’ movement, claiming it couldn’t cut data prices without more spectrum.” 

He pointed out that when Vodacom finally secured spectrum in the 2022 auction, the company not only declined to lower data costs but increased them, funnelling the extra revenue into their 5G network. 

“This hardly reflects a company committed to affordable, accessible broadband for the masses,” Colmer said.

“The 2022 auction even featured a unique spectrum allocation lot in sub 1 GHz – that required rural rollout before it could be used in urban areas.” 

“And what did Vodacom do? Ignored it, as did the other operators. The spectrum remains unsold, and there is little evidence of any rural rollouts since then.”

Colmer said that, with MTN eyeing Telkom’s network, Vodacom’s acquisition of Maziv would solidify a two-giant monopoly. 

Together, he believes these two players could hike prices and squeeze smaller providers out of the market. 

“Smaller operators like those represented by WAPA, which has been bringing broadband to underserved areas for years, would be shut out by Vodacom’s deep pockets and aggressive pricing,” he said.

“Let’s remember that South Africa’s telecom landscape only saw real disruption when companies like Cell C and Rain entered the market.” 

“By introducing more affordable, uncapped LTE options, these smaller players shook up the status quo set by Vodacom and MTN. Without them, Vodacom and MTN might have continued with their high-priced offerings, catering mainly to higher-income, urban customers.”

Colmer said the Competition Commission’s decision isn’t anti-growth – it’s pro-competition. 

He argued that, in a free market, the price should be set by competition, not monopolistic giants with inflated pricing strategies. 

“Smaller ISPs have already established footholds in rural areas – footholds that are sustainable, cost-effective, and cater to the communities Vodacom ignores,” he said.

“Let’s face it: Vodacom’s services are already available in under-connected areas, but most rural populations simply can’t afford them. And why should they have to?” 

“Just as WAPA and its members bring access at a fair price, competition – not monopolistic dominance – will ensure underserved communities stay connected affordably.”

He said that if Vodacom had succeeded in this deal, poorer, rural South Africans would be the ones to suffer. 

“So, let’s be thankful the Competition Commission saw through the thin veil of promises. Rural communities don’t need monopolistic giants,” he said. 

“They need competition that drives affordable access for all, and this blocking move has ensured that, for now at least, they’ll have just that.”