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After the Bell: Our changing lives — a tale of two mergers
After the Bell: Our changing lives — a tale of two mergers

Daily Maverick

time11 hours ago

  • Business
  • Daily Maverick

After the Bell: Our changing lives — a tale of two mergers

At the heart of it really are the promises that Vodacom and Maziv have made — that they will connect hundreds of thousands of homes in low-income areas to broadband fibre internet. There is a wonderful phrase media experts have used to describe to me people who listen to talk radio. They talk about older people, and those who are 'attitudinally interested' in news. The fact you have opened this mail suggests you are 'attitudinally interested' in business, news and our economy. I would use that phrase to describe my vague interest in business when I was younger. Stories about mergers and deals didn't really seem to affect me. So what if two mining companies were now one? The price of platinum didn't really matter to me. But two mergers going through our economy right now will have a huge impact on me. And because of your attitudinal interests, they will affect you too. The first is the Vodacom-Maziv merger. The second is the MultiChoice-Canal+ deal. Together, they show how our society and economy are changing, and what this will mean for how you spend your time. Broadband At the heart of it really are the promises that Vodacom and Maziv have made. As Lindsey Schutters writes in this incredibly useful explainer, they have essentially promised that they will connect hundreds of thousands of homes in low-income areas (think townships) to broadband fibre internet. Now think for a second about how the internet has changed your life. No matter where in the world your family is, having mobile data means you can communicate on WhatsApp. And, if you want, for very little money, you can make a voice call to them. The first time I realised the unbelievable power of this was in 2012. I was on holiday in someone else's very expensive house in Zinkwazi, recovering from the ANC's Mangaung Conference (the recovery from the holiday is a story I need not trouble you with here). The person who ran the house was from Malawi. I went to ask him something and he was in the middle of a call to a family member. Being in the middle of my transition from Nokia to Android, I had no idea such a thing was possible on WhatsApp. Considering the 150-year history of migrant labour in southern Africa, of how so many people have come here from other countries, and lived apart from their families, you can imagine the impact daily voice calls would have for this market. Now there will be a step change. It will not just be voice calls — fibre brings pictures, video calls, a complete change in life. The fact that it is usually un-metered means you can just download as much as you like (the record among people I know is held by a teenager. Somehow she was able to use around 14GB a day … if you can beat that, please get in touch.) This complete freedom of data (that's not strictly accurate, there will be bills to pay for it) means that you can live a completely different life. There are many businesses that are completely online, so there will be no hindrance for people to jump on to this and hopefully make money. Marketing costs For people who run physical businesses, like informal carwashes or hairdressers, their marketing costs will be virtually zero. Social media is all they need. But more than that, hopefully, there will be more access to better-quality education from virtually anywhere in the world. While I no longer believe virtual education is as effective as the physical kind, I still hope that someone somewhere in the world will come up with a system (perhaps for tertiary levels) that is effective for many people. This would hopefully help millions of people build on whatever they have been given by our basic education system (while I believe that millions of people have been betrayed by our schools, there are still many people who have benefited immensely). Considering the awful physical environments in which so many of our people live, anything that helps them have lives outside of this is a fantastically good thing. (This may be why so many shacks have satellite dishes — if you live in a terrible place, entertainment that takes you out of that place is essential.) During the load shedding era, the SA Reserve Bank estimated that a lack of reliable power was costing our economy about 2 percentage points of GDP growth. I can't even begin to imagine what incredibly cheap fibre will do to where people actually live. But it should, surely, help our economy. That said, it is really the bare minimum for us to keep up with the rest of the world. While the Vodacom-Maziv merger is not really driving the MultiChoice-Canal+ merger, one transition is clearly driving the other. Perhaps the biggest class difference between my wife and I is that she grew up with M-Net and I did not. Completely unfairly, she also had Bop TV. Virtual monopoly DStv made millions for a very long time in many places with its virtual monopoly both on entertainment and the live shared event that is sport. That is now under threat simply because with fibre comes streaming and with streaming comes intense competition. The rise of streaming has led to what has been called 'The Golden Age of TV'. This probably ended in 2023, which is why you can still spend so much time on a streaming service on a Friday night looking for something you and your children can all tolerate. The rollout of fibre broadband to millions of people would lead to massive changes in our society. Whether you are attitudinally interested in this transition or not, I wouldn't be surprised if there are more mergers that start to affect you directly as a result of this significant change. DM

Vodacom Tanzania's smile widens after telco takeover
Vodacom Tanzania's smile widens after telco takeover

Zawya

time18 hours ago

  • Business
  • Zawya

Vodacom Tanzania's smile widens after telco takeover

Vodacom Tanzania earlier this year completed the takeover of Smile Communications Tanzania Ltd with a payment of Tsh73.22 billion ($28.18 million) as the telco moved to expand the rollout of its 4G and 5G coverage in the Tanzanian market. Latest disclosures show that the amount comprised Tsh60.72 billion ($23.37 million) as payment to Smile Holdings shareholders and Tsh12. 5 billion ($4.81 million) in a reassignment cost for the spectrum acquired through the acquisition of the South African telecom operator. In its latest annual report, Vodacom says prior to the acquisition, Smile Communications Ltd had ceased operations, terminated contracts with partners and retrenched employee.'In March 2024, we acquired a small telecom operator – Smile Communications Tanzania Limited (Smile), which gave us access to the essential spectrum resources for enhancing our network infrastructure and providing superior customer experience,' the company says.'This agreement granted us access to spectrum resources previously held by Smile, including 20MHz of 800MHz and 20MHz of 2 600MHz. This additional spectrum, suitable for a broader coverage and high capacity for faster speeds, has enabled us to expand our 4G footprint and accelerate the rollout of 5G technology.'The company says that since concluding the acquisition, it has successfully activated the spectrum and connected more than 1,000 sites across the country.'In addition to providing greater network efficiency and reliability, the acquisition ensured we are well-positioned to meet Tanzania's growing demand for mobile data services while enhancing our existing customers' data experience,' the company says. Spectrum auctionSmile Communications Tanzania Ltd is a subsidiary of Smile Telecoms Holdings, a South African telecommunications conglomerate with operations in Tanzania, Uganda, Nigeria, and South Africa. Smile began its operations in Dar es Salaam and Arusha but expanded its network after the company raised $365 million in debt and equity financing to extend broadband services Spectrum is the range of electromagnetic frequencies used for wireless communication. It is a portion of the broader electromagnetic spectrum that encompasses everything from radio waves to gamma rays. Specifically, the radio frequency spectrum, which is used for wireless technologies like mobile phones, Wi-Fi, and broadcasting, is a key part of this range. On February 3, the TCRA issued a draft information memorandum on its plan to license new spectrum in 3600-3800MHz frequency band through a spectrum auction. Reserve prices were proposed at Tsh30 billion ($ 12 million) per 1x50MHz block. Vodacom Tanzania is 75 percent controlled by South Africa's Vodacom Group Ltd, whose ultimate parent is the British Vodafone Group Plc. Vodacom Tanzania recorded a 69.4 percent growth in net profit to Tsh90.51 billion ($34.84 million) in the financial year ended March 31, 2025, from Tsh53.42 billion ($20.56 million) last year, enabling the board to propose a final dividend equivalent to 50 percent of the profit after tax, in accordance with the company's dividend policy.'Increased adoption of smartphones is critical in supporting the transformation to the digital economy. We will continue working with our partners to facilitate access to affordable smartphones. And, we will continue investing in our network, in particular the data network, to expand coverage and enhance quality of services to address customer experience issues,' the company says. In July 2023, the TCRA issued the Interconnection Rates Determination No. 6/2023, which set the mobile calls termination rates (MTR) applicable for five years to December 2027. Accordingly, in January 2025, the MTR dropped by 4.5 percent to Tsh1.68 per minute which will be applicable until December 31, 2025. Starting January 1, 2026, the rate is expected to drop further by 4.8 percent to Tsh1.60 per minute, which will be used up to December 31, 2026. © Copyright 2022 Nation Media Group. All Rights Reserved. Provided by SyndiGate Media Inc. (

How Vodacom and Maziv convinced everyone they had changed
How Vodacom and Maziv convinced everyone they had changed

Daily Maverick

time5 days ago

  • Business
  • Daily Maverick

How Vodacom and Maziv convinced everyone they had changed

All the details from the Vodacom/Maziv merger Competition Appeals Court hearing where R12bn in promises nearly caused a fender-bender. When senior counsel representing the Competition Commission, advocate Daniel Berger, said, 'My lord, as an officer of the court, I am duty bound to commit this statement to the public record,' I nearly drove my car off the road in shock. I was on my way from collecting my kids from school to drop my son off at his football practice, and things were getting spicy in the post-lunch session of Competition Appeals Court (CAC) proceedings. But how did we get here? The devil in the details Earlier this month, I reported on the Competition Commission's dramatic about-turn on the Vodacom/Maziv merger – how they went from fierce opposition to sudden support after the parties agreed to 'revised conditions'. Now, sitting in back-to-school traffic with a Teams call crackling through my car speakers, I got the full story of exactly what those conditions entail. And frankly, it's either the most comprehensive set of telecoms concessions in South African history, or the most elaborate corporate sleight of hand. The headline number that had everyone's attention was always going to be the money. Maziv has committed to a cumulative capital expenditure (capex) of 'at least R12-billion' over five years for network expansion and maintenance. That's 'two more (billions) than it was before,' as one counsel helpfully clarified for those of us trying to do math while navigating parking lot chaos. But here's where it gets interesting – and where my daughter, sitting in the passenger seat doing homework, started asking why I was shouting at my laptop again: of that R12-billion, R9-billion will be spent specifically on new fibre projects, with the commitment period restarted from April 2025. They've effectively put the 'clock back to zero' on their investment timeline. The kicker? The capex will be 'primarily but not exclusively spent on roll-out of infrastructure in low-income areas.' This isn't just about passing homes – it's about actually connecting them. The million homes promise Maziv has undertaken to pass at least one million homes in lower-income areas over five years, with at least 350,000 homes in what they're calling 'key areas' (think Alexandra Township), what counsel is calling the 'lowest of low-income homes'. My daughter is now asking what I mean when I keep muttering about 'homes passed'. How do you explain to a 14-year-old that a telecoms company just promised to wire up the townships? But the really fundamental concession – the one that had legal eagles in the virtual courtroom practically purring, is this: Maziv must provide 'sufficient capex to ensure that every home passed in terms of the commitments that wishes to be connected on the prevailing terms and conditions for connection is connected' for five years. What this means They can't just run fibre past your house in Alex and then charge you R2,000 to actually connect. They have to budget for actual connections, not just the theatrical gesture of running cables down your street.. Boardroom chess The shareholding arrangements have been tweaked in ways that would make any corporate governance lawyer proud. Vodacom still gets its initial 30% co-controlling equity interest, but the path to 40% just became significantly more complicated. Under the revised conditions, which now meet muster for Compcom sign-off, 'Vodacom can't increase its shareholding beyond 34.9% without the consent of the Commission.' And if it wants to move to more direct forms of control, it'll need fresh merger approval entirely. I gaze directly into the sun, trying to follow the technical submissions about board composition. All parties are now trying to explain, much to the chagrin of the merging parties, to Judge President Norman Manoim that the 'extra four percent' shareholding isn't the nothingburger he keeps making it out to be. You see, the composition of the board has been restructured since the Competition Tribunal blocked the deal: seven Maziv directors, seven Vodacom directors, and now four independent directors (up from three), plus CEO/CFO. Crucially, 'Vodacom will not be entitled to veto their appointment' of independent directors. It's corporate governance with training wheels, designed to address exactly the control concerns that got this deal prohibited in the first place. Clearing the blockade The legal arguments against the Competition Tribunal's original prohibition are where this hearing gets properly spicy. Advocate Jerome Wilson, representing the merging parties, spent considerable time arguing that the tribunal had 'misdirected itself' through what he called 'internal mistrust' and 'cynicism or bias'. The tribunal, Wilson argued, relied on 'extraordinary allegations' about alleged past collusion between Vodacom and MTN from media reports dating back to 1994 – allegations that were never properly tested in proceedings. This context, he said, apparently 'infected the Tribunal's entire reasoning process'. Wilson's most damning critique focused on the tribunal's 'counterfactual analysis', basically, what would happen without the merger. The tribunal assumed Vodacom would become a very significant fibre player in low-income areas and that other players would fill any investment gap. The evidence? A Dark Fibre Africa representative testimony saying it would take 'at least three years for me to find an investor and I cannot guarantee you that I would find one', and that 'nobody else has come up since 2015' other than Vodacom. The tribunal's reliance on speculation rather than what Wilson calls 'real world outcomes' was deemed a fundamental error. But this does not erase the other issues. The maths starts math-thing While lawyers argued legal theory, the market realities are crazy. Pre-merger, Maziv (through Vumatel) commanded 32% of the fibre-to-the-home (FTTH) market with 2,050,000 homes passed. Vodacom's standalone fibre network? A measly 2.5% with 158,000 homes. Post-merger, the combined entity will control 34.5% of homes passed (2,208,000) and 34.4% of homes connected (885,000). That makes them significantly larger than Telkom's Openserve at 20.9% of homes passed. I explain to my now fully engaged teenager that this deal is essentially creating a duopoly in South Africa's wholesale fibre market: Vodacom-Maziv versus Openserve, with everyone else scrambling for scraps. Which was the original Compcom opposition point, until the merging parties sweetened the deal to get government buy-in – the DTIC and communications minister both supported the appeal. Honeypot dealmaking These post-tribunal public interest commitments read like a policymaking wet dream. Free gigabit per second fibre connections for all public schools, libraries, and clinics passed by the FTTH network roll-out. More police stations getting Fixed Wireless Access (FWA) products. Enhanced employee share ownership plans. Vodacom has also committed to achieving 90% 5G population coverage within five years, with obligations to connect additional FWA users that will require them to 'price their FWA competitively'. For pricing protection, FTTH can't increase prices for the lowest-price options for two years, and there can be 'no forced upgrades' for five years – protecting lower-income consumers from being pushed on to more expensive packages. You see, the tribunal's concern was that Vodacom's veto rights could allow it to force Maziv to act against its profit-maximising interests – essentially, to favour Vodacom over other wholesale customers. The merging parties argued this was a 'fundamental conceptual error'. Vodacom would account for 'less than 20% of Maziv's revenues', so any theoretical side payments or compensation for non-profit-maximising behaviour simply wouldn't make economic sense. The burden of debt What's often lost in the regulatory theatre is why Maziv needed this deal in the first place. CIVH, Maziv's parent company (owned by Remgro), was carrying R19.5-billion in debt by mid-2024. This merger provides the capital injection needed to fund the next phase of fibre expansion, particularly into areas where the business case is marginal. The 'lessening of competition' identified by the tribunal primarily affected 'certain wealthier households' – about 2,000 to 7,500 homes, according to the merging parties. They argued this was insignificant when weighed against connecting a million low-income homes. One genuinely innovative aspect of the revised conditions is an enhanced 'fast-track interim relief process' for foreclosure concerns. This allows an expert to make binding determinations while formal investigations are under way, 'taking the load off the commission' for complex, time-sensitive issues. It's regulatory innovation born from regulatory failure. A recognition that the traditional competition processes aren't nimble enough for rapidly evolving telecoms markets. Concession is a town in Zimbabwe As I finally switch off the Teams call, the bigger picture comes into focus. Compcom's about-turn isn't just about accepting better conditions, it's about accepting that South Africa's digital infrastructure reality requires uncomfortable compromises. The revised deal creates what's being called a 'fibre powerhouse with unparalleled market scale' while theoretically addressing competition and public interest concerns. Whether those theoretical protections work in practice remains to be seen. But here's the uncomfortable truth that emerged from the proceedings: the same companies we don't trust to compete fairly are the only ones with deep enough pockets to bridge our digital divide. In a country where millions still lack basic connectivity, that might be a trade-off we're willing to make. DM

Vodacom's first quarter performance: Revenue growth outpaces share price drop
Vodacom's first quarter performance: Revenue growth outpaces share price drop

IOL News

time6 days ago

  • Business
  • IOL News

Vodacom's first quarter performance: Revenue growth outpaces share price drop

Vodacom business in Egypt was a star performer in the quarter to June 30, having grown service revenue 43.8% in local currency. In South Africa, service revenue increased by 3%. Image: File image Vodacom Group's share price slid by 5.46% even though first quarter service revenue growth of 13.8% tracked favourably against the group's medium-term target of double-digit growth. The share price traded at R135.86 on the JSE Wednesday afternoon, after the release of a trading update for the quarter to June 30 - the price was over 42.2% higher than at the same time last year. 'Encouraging trends from Vodacom Group's first quarter performance support the confidence we communicated in May this year, when we upgraded our financial targets, signaling that the organisation is poised for stronger growth in the medium term,' said Vodacom Group CEO Shameel Joosub. Egypt remained a star performer, having grown service revenue 43.8% in local currency. In South Africa, which accounts for more than half the group service revenue, service revenue increased by 3%, which Vodacom's directors described as 'resilient.' Joosub said there had been strong revenue and service revenue growth in rand terms, a healthier performance by the International business, good growth in the contract segment and beyond mobile services in South Africa, and another all-round excellent performance by Egypt. Overall, group revenue grew 10.6% to R40bn, with South Africa making up R22.52bn of that. International business service revenue increased 9.7%, with normalised growth accelerating to 12.4%. Group financial services revenue increased 18.1% to R3.9bn Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Advertisement Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Next Stay Close ✕ .Joosub said that their strategy to diversify revenue growth by product and geography continues to pay dividends, evidenced by the 10.6% growth in revenue. Group service revenue increased 11.4% to R32.3bn in the first quarter - group financial services revenue growth came to 18.1%. Tanzania, DRC and Lesotho were the significant contributors to the 12.4% growth in the International business. Service revenue from beyond mobile services was a key growth driver and contributed R6.9bn in the quarter, which equates to 21.4% of the group and 'is well on track to reach our target contribution of 30% by 2030.' Financial services remained a priority and is the largest component of beyond mobile services. 'Including Safaricom, we now process $460bn in mobile wallet transaction value annually, which underscores the impact and scale of this business. This is a 14.9% increase in transaction value over the past 12 months and showcases our clear fintech leadership position in Africa,' said Joosub. The growth of the financial services was pleasing as it sought to deepen financial inclusion through an increasing portfolio of services that already includes insurance, loans, savings, international money transfer and merchant services. Group financial services revenue of R3.9bn was supported by strong growth from the insurance business in South Africa, strong growth in Egypt of 44.3% and a 17.4% increase from International business on the back of an improved performance in Mozambique. South Africa's results were supported by strong performance in the contract segment and good growth in financial services, fibre and cloud services, offsetting a marginal decline in the prepaid segment. After investing R1.6bn in the quarter, the group expected to invest around R12bn of capital expenditure in the current financial year. 'Looking ahead, we're focused on delivering on our Vision 2030 targets, which include growing our customer base to 260 million and our financial services customer base to 120 million,' Joosub said. 'Core to this strategy will be accelerating mobile and fixed connectivity, scaling handset financing and the roll-out of innovative digital and financial services in all our markets. We will also seek to expand our partnerships across Africa.' BUSINESS REPORT

South Africa's Maziv valued at $2bln after revised deal with Vodacom
South Africa's Maziv valued at $2bln after revised deal with Vodacom

Zawya

time7 days ago

  • Business
  • Zawya

South Africa's Maziv valued at $2bln after revised deal with Vodacom

South Africa's Vodacom Group said on Friday, 18 July, its proposed acquisition of a 30% stake in fibre network operator Maziv could value the target company at up to R36bn ($2bn) after agreeing on revised terms. File photo: A branch South African mobile communications provider Vodacom in Cape Town is shown in this picture taken on 10 November 2015. Reuters /Mike Hutchings/File Photo The telecoms operator, majority-owned by Vodafone, is moving closer to finalising the long-delayed deal following a breakthrough with the Competition Commission last week to clear the way for an unopposed hearing at the Competition Appeal Court on Tuesday. After agreeing on revised terms with the Commission and Community Investment Ventures Holdings (CIVH), Maziv's parent company, Vodacom will now contribute fibre network infrastructure worth R4.9bn in return for new shares in Maziv and pay R6.1bn in cash for new shares, it said in a statement. Previously, Vodacom offered R6bn in cash and in fibre assets valued at R4.2bn at the time. Vodacom will also acquire additional shares from CIVH for an estimated R2.5bn to reach the 30% stake. Maziv, which owns network operators Vumatel and Dark Fibre Africa, may declare a dividend of up to R4.2bn before the deal closes. If declared, Vodacom's cash consideration would be reduced by up to R1.3bn, the company said. The revised terms of the deal reflect a pre-acquisition transaction equity valuation of R29.8bn if the dividend is declared, and R34bn if it is not, Vodacom said. The transaction also includes Maziv's 49.96% stake in Herotel, a wireless internet provider. Vodacom will pay an additional R600m for its share of that stake, raising the total equity value to R31.8bn, or R36bn if no dividend is declared. Vodacom's option to increase its stake in Maziv has been revised down to 4.95% from 10% previously, potentially raising its total stake to 34.95%. All rights reserved. © 2022. Provided by SyndiGate Media Inc. (

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