Mobile operator MTN is taking a neutral stance on its rival Vodacom’s bid to merge with fibre infrastructure company Maziv.
The Competition Tribunal this week continues to hear evidence from factual and expert witnesses relating to the proposed merger between Vodacom and Maziv.
The hearings follow the Competition Commission in August recommending the prohibiting of the proposed merger.
According to the competition watchdog, the proposed deal is likely to substantially prevent or lessen competition in several markets and the conditions offered do not fully address the resultant harm to competition.
Under the deal, Vodacom is looking to acquire a 30% stake in the newly-created Maziv, with an option to increase the stake by 10%.
Maziv was created last year by Remgro-owned Community Investment Ventures Holdings (CIVH) after it folded Vumatel and DFA into one giant fibre infrastructure company.
While the local fibre players expected consolidation in the market, some smaller players expressed fears that the merger would stifle competition.
Vodacom, through a combination of assets of approximately R4.2 billion and cash of at least R6 billion, is looking to acquire up to 40% of the ordinary shares of Maziv.
CIVH and Vodacom argue the transaction will be beneficial to the market, in that Vodacom fibre assets will become commercially available on an open access, transparent and non-discriminatory basis.
In addition, they note, the investment will enable Maziv to extend fibre infrastructure to an estimated one million new households in lower income areas, create up to 10 000 new jobs, commit at least R10 billion to capital expenditure, and facilitate the creation of small to medium enterprises through a fund formed specifically for this purpose, with R300 million of committed capital.
MTN believes the investment in South Africa’s fibre network infrastructure is positive, and the consolidation of the industry is an inevitable and even desirable feature of the national and international landscape, says the operator in a statement.
“MTN is not opposing the merger, nor does it support a prohibition of the proposed Vodacom-Maziv merger. Where there is market consolidation, scrutiny is required to ensure there is no substantial harm to competition. If material concerns of anti-competitive conduct arise, these should be sufficiently mitigated by conditions that are comprehensive, effective, monitorable and enforceable,” says MTN South Africa CEO Charles Molapisi.
“We can confirm we are participating in the Competition Tribunal’s merger proceedings in the Vodacom and Maziv transaction.”
Molapisi notes that during its investigation of the proposed merger, the tribunal contacted MTN to request information and solicit its views on the proposed merger, in line with standard practice.
“We have made concern submissions and MTN’s scope of participation in the merger proceedings concerns three topics – the competitive effects of the proposed merger, market definition and potential remedies in the event of a conditional approval.
“We are of the view that the final approach taken by the Competition Tribunal may set a precedent on how other merger applications will be assessed which, depending on the outcome, may pose a challenge to future desirable consolidation in the market.
“We believe our participation in the merger proceedings will assist the Competition Tribunal in its adjudication of the proposed merger and establish a sustainable framework to govern such transactions in the future,” Molapisi says.
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