In a surprising U-turn, South Africa’s Competition Commission on July 8 touted support for Vodacom’s proposed acquisition of a 30 percent stake in fibre network operator Maziv for R11 billion, combining cash and fibre assets.
The move comes despite the Competition Tribunal’s earlier decision to block the deal over serious competition concerns.
The Tribunal, in a detailed ruling handed down in October 2024 after a lengthy hearing, argued the merger would substantially lessen competition in both the fibre and mobile markets.
It warned the deal could disadvantage fixed wireless access providers and enable bundling practices that would tilt the market in Vodacom and Maziv’s favour.
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But just months later, specifically on July 22, Vodacom, Maziv, and the Commission jointly approached the Competition Appeal Court to overturn the Tribunal’s decision, citing newly agreed terms that aim to resolve the competition issues at the heart of the case.
Main justification for the Tribunal’s ruling
The main justification for the tribunal’s decision, which was outlined in a 374-page document released a few months later, was that it would significantly reduce or eliminate competition in South Africa’s fibre and mobile industries.
Furthermore, the Tribunal was worried that the deal would “stifle” competition with fixed wireless access providers and open up opportunities for bundling that would give the businesses a competitive advantage.
Nonetheless, Vodacom and Maziv came to an agreement with the Competition Commission on updated terms that, in its opinion, will significantly address the competition issues.
According to the agreement, Vodacom and CIVH, the owner of Maziv, would allow for additional fibre-to-the-home (FTTH) connectivity expansion into underprivileged areas, thereby bridging the digital divide and boosting the economy.
Sweeping concessions
The updated agreement includes a raft of concessions which include;
Increased Capital Commitments: Maziv will invest significantly more over five years to expand open-access fibre networks for third-party providers.
Tougher Coverage Targets: The deal introduces stricter rollout milestones to ensure wider fibre access, especially in underserved areas.
Affordable Broadband Pledge: Vodacom and Maziv will continue to offer budget-friendly internet packages for low-income households.
Enforced Divestitures: If overlapping infrastructure isn’t sold within a set timeframe, a trustee will oversee forced divestments to protect market dynamics.
Governance and Oversight: Measures prevent the merged entity from locking out rivals, including a fast-track interim relief mechanism to counter anti-competitive conduct.
Additionally, the agreement imposes more stringent divestiture requirements. A trustee will be appointed to supervise a forced sale if overlapping infrastructure is not sold within a predetermined period of time, protecting competition and re-establishing the dynamics of the market prior to the merger.
The updated terms also include governance protections that restrict the combined company’s power to bar rivals from vital infrastructure. A new fast-track interim relief mechanism has also been added to prevent anti-competitive behaviour, enabling prompt action prior to the completion of drawn-out investigations.
The agreement includes broader public interest commitments in addition to competition remedies. These include free 1 Gbit/s fibre connections for public libraries and clinics, expanded connectivity support for police stations, and more fibre rollouts for homes, businesses, and important locations.
Appeal court pushback
Yet the Appeal Court appeared skeptical. Judges questioned why the companies were contesting the Tribunal’s ruling on legal grounds while simultaneously promoting a renegotiated deal.
Advocate Jerome Wilson, representing Vodacom and Maziv, said the court should focus on the Tribunal’s legal missteps, particularly its failure to weigh public-interest benefits, rather than the revised terms. “We are dealing with real-world outcomes here,” Wilson said, noting Maziv requires Vodacom’s capital to sustain fibre expansion.
Judge Dennis Davis countered that the matter had become compounded and suspended due to the absence of a formal application to introduce the new terms. He noted the stronger argument might be that the revised commitments directly address the Tribunal’s original concerns.
Wilson insisted that Maziv needed Vodacom’s funding to continue expanding affordable high-speed internet, especially in marginalised areas.
First announced in 2021, the Vodacom-Maziv deal has faced repeated regulatory hurdles. While Vodacom Group CEO Shameel Joosub hailed the Commission’s shift as a step towards “bridging the digital divide,” the merger remains under judicial review.
The Competition Appeal Court’s final decision could set a significant precedent. Until then, questions linger over whether the revised terms go far enough to safeguard competition while delivering on promises of inclusive digital growth. The deadline to complete the deal is September 30.