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Daily Maverick
6 hours 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
IOL News
13 hours 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. 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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
Zawya
2 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. (
The South African
6 days ago
- Business
- The South African
You can now buy a R67 smartphone in South Africa
Vodacom is marking Mandela Month with a bold move to close the digital divide, offering select prepaid customers with 2G handsets the chance to upgrade to a 4G Kicka 6 smartphone for only R67. According to Mybroadband , the initiative, currently available in select KwaZulu-Natal stores, will soon expand to Mpumalanga and Limpopo. It forms part of Vodacom's broader 2025 theme: 'It is in our hands to combat poverty and inequity.' Rishaad Tayob, Vodacom South Africa's Consumer Business Director, emphasised the impact of outdated technology, noting that millions of people still rely on 2G devices, which limit access to vital digital services. 'By offering affordable 4G smartphones, we are empowering people to participate fully in the digital economy,' he said. 'Following Madiba's legacy of 67 years of fighting for equality, we have the power to make a positive impact. Vodacom is proud to turn that belief into action in the communities we serve.' The Kicka 6 normally sells for R699, meaning eligible customers save a massive R632. On top of that, anyone who recharges with R29 or more will get a bonus 20GB Buy and Get data bundle, valued at R149. Let us know by leaving a comment below, or send a WhatsApp to 060 011 021 1 Subscribe to The South African website's newsletters and follow us on WhatsApp, Facebook, X and Bluesky for the latest news.
Daily Maverick
6 days ago
- Business
- Daily Maverick
After the Bell: WhatsApp — changing the world one group (too many) at a time
It's amazing how WhatsApp has changed our lives. I think I live my life on it. And the fact that companies can use it to keep teams together across borders, oceans and continents is sometimes like magic. But this doesn't mean that it's all plain sailing. I sometimes wonder if the quickest way to bring the economies of many countries to a staggering halt would be to simply switch off WhatsApp. Really, I think I live my life on it. Virtually all of my communication. To the point where I often forget to check my email. I imagine that you, like me, are on an unbelievably long list of groups. And while it's become common to complain about the number of groups that you are on (so many groups start with the admin apologising for creating 'yet another group'), the fact is that creating another group is usually the correct solution to whatever communication problem you have. It's also amazing how WhatsApp has changed our lives. In the late 1990s, I tried to phone a friend in Harare simply to wish him Merry Christmas. This was from a home landline to a home landline. It took forever to work out how much it would cost. But that was nothing compared to how long it took. Zim being Zim, and this being the only way to speak to him, I called about 17 times just to get his landline to ring. Much easier to talk to Now, that same friend has moved several time zones away — but he's so much easier to talk to. I can call him any time and have a quick chat. All on WhatsApp. It's funny because the main reason this works is that data networks have been created. More and more of us make our calls on WhatsApp because it's cheaper. MTN and Vodacom have both noticed this, as it has had quite a big impact on their bottom line. In May, MTN said its data revenue for the first quarter of the year was up by nearly 18% and described its voice revenue as 'mostly flat'. Obviously Vodacom is hugely affected by this too — they've reported the same dynamic. At some point, some of these companies might start to switch off their voice services. Last year in December, after spending much of the day phoning tyre shops (this was the same Tyre Shop Incident of 2024, where I was inspired to write about retirement), I ran out of airtime. Thankfully, I was on the phone to an old friend at the time. I called her back on WhatsApp and we could both not stop laughing at the immaturity of running out of airtime. It was so 2002. Back when we were young. Now if you run out of airtime, you probably won't notice. Running out of data, however, will ruin your day. But WhatsApp has played probably the biggest role in this transition. I think the first cellphone I got that allowed me to make a video call was a Nokia back in 2004. The first video I took was of my friend on our roof running after what was described as one of the last three chimney sweeps in Joburg. For a decade, when I tapped on a contact, my bloody phone would ask me if I wanted to make a normal call or a video call. Not once did I tap 'video call'. Then WhatsApp came along and I was making video calls all the time. I don't know what changed, but it was WhatsApp that made me do it. Not Nokia. Like magic And of course the fact that companies can use it to keep teams together across borders, oceans and continents is sometimes like magic. But this doesn't mean that it's all plain sailing. Sometimes I wonder if a lot of what happens in WhatsApp groups has become quite performative. Perhaps it's just the career I'm in, but so often people feel they have to all join in to say the same thing. Say someone wins an award or something. Everyone in the entire group now has to be seen to say 'well done'. I'm of a generation where, if you wanted to say that, you'd make a phone call. Sometimes someone will do something really exceptional and I'll phone them to congratulate them. When everyone else congratulates them on a group, I then wonder if perhaps all of the other group members think I didn't think it was that impressive. Even though I've gone further and phoned them. I realise I'm a member of the species Grumpasaurous for saying this, but I find birthdays particularly tiresome. If you have 50 people on a group, that's a birthday almost every week. And with 49 messages saying the same thing every week, that's nearly 2,500 messages a year. All saying the same thing. Being of an age where my birthdays have ceased to exist (I have children…), I often just don't see the point. I'm probably on my own here. In fact, I hope that I am. And that everyone else just gets more joy from this than I do. WhatsApp is dangerously close to becoming my entire life. I can't imagine life without it.
