South Africa Blocks Vodacom’s $745 Million Fiber Acquisition Deal

South Africa’s Competition Tribunal has officially barred Vodacom Group Ltd. from acquiring a 13.2 billion-rand ($745 million) stake in Remgro Ltd.’s fiber assets, a significant blow to the telecom giant’s plans to expand its digital infrastructure in underserved regions. This decision, handed down by the tribunal, is the latest in a series of setbacks following a 2022 recommendation by the Competition Commission urging authorities to prohibit the acquisition on antitrust grounds.

According to Bloomberg, Vodacom remains cautious, awaiting a full explanation from the tribunal to understand the specific objections. In a statement on Tuesday, the company indicated it would evaluate all available paths forward, which may include an appeal to South Africa’s Competition Appeal Court. Remgro, owner of fiber network operators Dark Fibre Africa and Vumatel through its subsidiary Maziv, echoed Vodacom’s stance, stating that it is also reviewing “all alternatives” to safeguard its interests in the transaction.

Vodacom CEO Shameel Joosub expressed disappointment in the decision, underlining the country’s urgent need for extensive digital infrastructure, especially in economically disadvantaged areas. “South Africa desperately needs additional significant investment, especially in digital infrastructure in lower-income areas,” Joosub stated. He explained that the company’s planned investment of up to 14 billion rand would have created approximately 10,000 jobs, driving internet access and digital services in communities that currently lack connectivity.

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The deal was set to be a cornerstone of Vodacom’s broader plan to increase fiber access across South Africa, with a 10-billion-rand allocation to bring high-speed connectivity to underserved regions. As part of the agreement, Vodacom proposed to purchase a 30% stake in Maziv, Remgro’s fiber business, with an option to later increase that share to 40%. Maziv’s operating companies, Dark Fibre Africa and Vumatel, both manage extensive fiber-optic networks, and the acquisition would have strengthened Vodacom’s position in the rapidly evolving digital landscape. According to industry analyst John Davies of Bloomberg Industries, the “clear industrial logic” behind the acquisition lies in the anticipated demand for high-speed internet, driven by the continent’s young, increasingly tech-oriented population.

Shares of Vodacom dipped by 1.1% in Johannesburg trading following the tribunal’s decision, valuing the company at approximately 232 billion rand, while Remgro shares fell 5.9% — marking the stock’s sharpest decline since March. Remgro, partly owned by billionaire Johann Rupert, saw this verdict as a setback for its fiber ambitions, as the acquisition would have provided crucial capital for expansion.

Davies further speculated that should Vodacom decide to pursue an appeal, the introduction of “remedies based on open access and menu-based pricing” could prove instrumental in swaying the Competition Appeal Court. Even if the deal remains blocked, he observed, the fiber sector is likely to remain a strong investment as South African telecom providers continue exploring ways to enhance revenue streams through network and data center expansion.

As the tribunal’s detailed rationale is awaited, the fate of this landmark fiber investment remains uncertain. However, Vodacom and Remgro’s plans underscore the growing importance of connectivity in South Africa’s digital future, and the decision is likely to reverberate across the telecom sector as companies navigate an increasingly complex regulatory environment.

Source: Bloomberg