SA’s Internet Service Providers’ Association (ISPA) has lodged an objection with the Competition Commission over a deal in which Vodacom is looking to buy a co-controlling equity stake in Community Investment Ventures Holdings’ (CIVH’s) fibre assets – Dark Fibre Africa (DFA) and Vumatel.
The deal, announced in November 2021 and subject to regulatory approvals, will see Vodacom holding a co-controlling 30% equity in a newly-formed InfraCo entity, into which all of the assets currently owned by DFA and Vumatel will be transferred, in addition to certain Vodacom fibre assets.
Vodacom has an option to acquire an additional 10% stake in the InfraCo to 40%.
The mobile operator believes the transaction will enhance and scale its fixed offerings across the consumer and business segments, and leverage a shared cost model to accelerate the provision of open-access infrastructure in SA.
In a statement, ISPA says as Vodacom and CIVH approach the regulatory and competition authorities to approve a transaction pooling their fibre network assets, the association seeks reassurance that the mobile operator’s historical closed access culture will be swept aside should the deal succeed.
According to ISPA, its 205 internet service provider (ISP) members have, to date, struggled to obtain wholesale offerings from Vodacom for on-selling to consumers.
Conversely, it adds, Vumatel and DFA have been pivotal in fostering fierce competition among ISPs by historically providing wholesale, fibre-based deals.
“Promised cash injections to advance the rollout of high-speed fibre in South Africa are to be welcomed, but ISPA is concerned about the ability of a traditional closed access culture to be successfully married to an historically open access, entrepreneurial-based culture,” says the organisation.
It adds that CIVH is the holding company of DFA and Vumatel, and is a long-time proponent of rolling out fibre in South Africa according to an open-access model that sees different resellers tapping into the base fibre offering and then competing to offer business and consumers different value-added high-speed broadband packages.
ISPA notes this has directly benefitted consumers and driven down the cost to communicate.
Vumatel is South Africa’s largest fibre-to-the-home network operator, while DFA provides fibre services in and between the country’s towns and cities, it adds.
Vumatel and DFA’s infrastructure investment programmes have provided more South Africans with access to high-speed fibre-based internet than any other comparable initiatives, ISPA says.
As working remotely becomes the norm, it must be ensured the open access philosophy – a national policy of South Africa – is protected and expanded, it notes.
ISPA has lodged an objection with the Competition Commission and provided requested information.
It says the commission has previously expressed concern about high levels of concentration of ownership in the telecoms industry.
“If we are to continue fostering robust competition in South African telecoms, it doesn’t seem particularly smart to ISPA to allow the largest company in the mobile space to merge with the largest company in the FTTH and national long-distance fibre space,” it concludes.
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