Vodacom’s $730-million deal faces appeal against block

Oluwatosin Racheal Alabi -

Key Points

  • South Africa’s trade minister appeals the blocked Vodacom deal.
  • MTN supports the Vodacom merger, citing the need for digital infrastructure growth.
  • The appeal could bring vital investments to South Africa’s underserved digital sector.

Vodacom, led by CEO Shameel Joosub, has had its acquisition of a stake in Remgro’s fiber business blocked by South Africa’s Competition Tribunal. In response, South Africa’s Minister of Trade, Industry, and Competition, Parks Tau, has formally appealed the decision, marking a significant step in the government’s efforts to fast-track digital infrastructure investments across the country. The R13.2-billion ($730 million) deal is seen as crucial for advancing South Africa’s digital economy and bridging the digital divide.

Parks Tau appeals the Competition Tribunal’s decision to block Vodacom deal

Minister Tau’s appeal seeks to overturn the Competition Tribunal’s decision to block Vodacom’s acquisition. This move is part of the government’s broader initiative to boost digital infrastructure and create jobs in South Africa. The government views the deal as vital for expanding the country’s fiber network, especially in underserved and lower-income areas.

Vodacom CEO Shameel Joosub has previously emphasized the urgent need for significant investments in digital infrastructure across Africa. The acquisition is considered essential for advancing that goal. Sources familiar with the government’s stance suggest that the merger will boost South Africa’s digital economy and increase competition in the telecom sector. If successful, the deal is expected to bring critical infrastructure improvements, particularly to areas struggling with access to high-speed internet.

MTN backs the merger, citing need for digital infrastructure growth

The Vodacom deal, which includes a R10-billion ($550 million) investment in fiber rollout and the creation of 10,000 jobs, has garnered support from various industry leaders, including Vodacom’s main rival, MTN. MTN CEO Ralph Mupita has emphasized that South Africa is falling behind global trends in technology and needs consolidation in the telecom sector to accelerate investment in digital infrastructure.

“We support the appeal because consolidation is needed in South Africa to drive accelerated investment in digital infrastructure and services,” Mupita stated. The backing from MTN underscores the importance of the deal, especially as global tech investments continue to grow and reshape the telecom landscape.

While the appeal has significant backing, the road to final approval remains uncertain. The Competition Appeals Court’s ruling could take several months, and deal terms are being renegotiated to address changing market conditions. Analysts remain cautiously optimistic that the deal will eventually go through, given its alignment with the South African government’s digital growth objectives.

The outcome of this case will have broad implications for both Vodacom and the telecom industry. It highlights the government’s strategic role in fostering digital infrastructure investments, which could benefit millions of South Africans by improving internet access, stimulating economic development, and creating jobs.