Vodacom and Remgro Set New Deadline for Fiber Merger Amid Competition Tribunal Review

Vodacom, a leading South African mobile communications company, and investment group Remgro have announced an extension to the completion date for their impending fibre infrastructure merger. This strategic move is set to create one of South Africa’s prominent fibre network providers, contingent on regulatory approval.

The move comes after the Competition Commission raised concerns in early 2023, recommending that the merger be blocked. Despite this setback, the two companies are preparing a robust defense to present at the Competition Tribunal, which has ultimate jurisdiction over antitrust concerns. The newly agreed upon deadline for completion has been set to November 29, 2024, allowing ample time for tribunal proceedings and subsequent decisions.

According to legal data from LexisNexis, a longstop date is essential to define the latest possible time by which the conditions of a transaction must be met or abandoned, ensuring a clear timeline for corporate transactions. The matter is scheduled to be presented in detail to the Competition Tribunal by mid-2024, with no specific timeframe yet defined for the ruling.

This deal involves the fusion of Remgro's CIVH fibre entities, Vumatel and Dark Fibre Africa, under the umbrella of a new holding company named Maziv. Vodacom has expressed its intention to acquire a 30% stake in Maziv, valued at an estimated R13 billion, with an option to increase its holding to 40% after the fulfillment of the last conditions precedent. This opportunity is to be acted upon within six weeks from the accomplishment of these conditions.

The arrangement, which was initially declared in November 2021, has already been sanctioned by South Africa’s telecommunications authority, Icasa. Thus far, no modifications have been made to the evaluation mechanism of Maziv, sustaining alignment with the transaction share price for subsequent adjustments.

Shameel Joosub, Vodacom’s Chief Executive, has highlighted cost efficiencies as a primary motivator for the merger. Collaborations and shared costs between telecom competitors are viewed as critical levers to operational savings. The necessity for such efficiencies comes at a time when Vodacom is reporting a dip in interim operating profit, influenced particularly by its start-up ventures in Ethiopia.

Despite these pressures, Vodacom has managed to register a growth of 4.7% in total group revenue on a normalized basis, indicating resilience and strategic financial maneuvering. As one of the telecommunication giants, with a valuation of approximately R223.6 billion on the Johannesburg Stock Exchange (JSE), the company aims to bolster its market strength and operational reach with the completion of the proposed merger with Remgro’s CIVH.

As the proceedings with the Competition Tribunal unfold, Vodacom and Remgro remain optimistic about the prospects of forming a formidable fiber network provider. The telecommunications landscape in South Africa remains competitive, with mergers and collaborations shaping the trajectory of infrastructure development and service excellence in the region.