The Competition Commission will no longer oppose Vodacom’s proposed acquisition of a 30% interest in Maziv after the parties reached an agreement on revised conditions that substantially remedy the competition concerns raised by the Commission in its recommendation to the Competition Tribunal.

Last year, the Competition Tribunal prohibited the proposed transaction wherein Vodacom intended to acquire 30%, and potentially 40%, of the issued share capital of Maziv, which will house all of the fibre assets owned by private equity firm Community Investment Ventures Holdings (CIVH), including Vumatel and Dark Fibre Africa.

The Competition Tribunal only published its reasons document in June.

This followed the August 2023 recommendation by the Competition Commission that the proposed transaction should be prohibited on the grounds that it raises both competition- and public interest-related concerns and that the proposed conditions tendered by the merging parties do not address these concerns.

In a statement issued on Tuesday, the Competition Commission said that, after the parties agreed on remedies for the competition and public interest concerns, it planned to approach the Competition Appeal Court on an unopposed basis and will inform the Court how the enhanced conditions address the concerns it previously raised with the proposed transaction.

The Competition Appeal Court is due to consider the matter on July 22.

At the time of the Competition Tribunal hearings, there were three primary competition concerns that were not adequately addressed by the proposed conditions.

This included the horizontal reduction in competition between fixed-wireless access (FWA) and fibre-to-the-home (FTTH).

“The conditions positioned to address this concern was that Vodacom would offer FWA where it rolled out 5G and that it would price it ‘competitively’. However, the commitments on rollout of 5G sites and rollout of FTTH were insufficient to incentivise the parties to encourage consumer access at competitive prices and ensure third party access to FTTH,” the Competition Commission explained.

The revised conditions improve the capital expenditure commitment by Maziv and extending it to a five-year period post-merger to ensure that Maziv remains incentivised to service third party network operators.

The revised conditions also promote competition between FTTH and FWA through enhanced coverage commitments coupled with connection commitments.

“The parties will need to price competitively if they are to achieve the connection commitments.”

In addition, Vodacom and Maziv agreed to maintain lower-cost broadband packages in the market to ensure that especially lower-income consumers have a range of competitively priced packages to choose from.

The agreement also covered the horizontal overlap in FTTH infrastructure and potential price increases post-merger, with the previous conditions inadequate as they included a ”weak” divestiture condition that did not adequately incentivise the merging parties to divest the overlapping infrastructure.

“The revised conditions put in place a standard divestiture arrangement whereby the failure to sell the assets within a particular period result in a trustee divestiture process to ensure the assets are divested and pre-merger competition is restored. The condition follows the standard formulation used in other merger transactions and requires that a transparent and competitive process be followed to identify a proposed purchaser.”

The parties also agreed on remedies for the vertical foreclosure concerns.

“Although there were fairly comprehensive conditions in place to address foreclosure, there were notable challenges with monitoring and enforcing the conditions with the resulting concern that action would not be sufficiently timely to prevent foreclosure from occurring and harming competition,” the Competition Commission elaborated.

To remedy this, some structural changes will be introduced to Maziv’s governance structure that limit the merged entity’s incentives to foreclose competitors.

“The revised conditions now also incorporate an enhanced fast-track interim relief process that will address potential foreclosure concerns while the lengthier formal process to investigate any alleged foreclosure is underway. This ensures that any attempt to get a first-mover advantage that will have an enduring effect in the market can be prevented through fast-track interim relief.”

Lastly, there are significant improvements to the public interest commitments, including additional capex spend to roll-out new fibre-to-the-business, FTTH and fibre-to-the-site infrastructure; free access to 1 GB/s fibre lines for public libraries and clinics passed by FTTH infrastructure; an increase in the number of police stations that Vodacom will provide with FWA products; an additional commitment to enterprise development; and an increase in the employee share ownership plan previously agreed.

“Access to reliable, high-speed Internet is the cornerstone of a dynamic economy and a democratic society. The Commission is confident that the revised conditions agreed with the merger parties will ensure that South Africa will benefit from the continued competitive prices and product choices in this critical sector,” commented Competition Commission commissioner Doris Tshepe.

Vodacom welcomed the move, stating that it marked a significant milestone in our ongoing efforts to enhance digital infrastructure and connectivity in South Africa.

“We are thrilled with the Competition Commission’s decision, as it aligns with our purpose of connecting people to a better future and our vision of bridging the digital divide through world-class connectivity – reaching more homes and businesses, including underserved communities,” said Vodacom Group CEO Shameel Joosub.

“Should the transaction be approved by the Competition Appeal Court, I am confident that it will enable us to accelerate network expansion, help address the cost to communicate and contribute meaningfully to job creation.”