Vodacom Group Ltd.’s deal to buy a stake in Remgro Ltd.’s fiber businesses was plunged into jeopardy after South Africa’s antitrust regulator urged the country’s Competition Tribunal to block the acquisition.
The Competition Commission said Johannesburg-based Vodacom’s acquisition, valued at 13.2 billion rand ($696 million), “is likely to substantially prevent or lessen competition in several markets,” according to a statement Tuesday.
The announcement is the second significant move from South Africa’s watchdog in as many days, after the body questioned the dominance of big tech firms operating in the country including Alphabet Inc.-owned Google.
African mobile companies have been investing in infrastructure as they seek to monetize services offered on their networks, towers and data centers. Wireless carriers are seeking to take advantage of the continent’s fast-growing, young and increasingly tech-savvy population, which use smart-phones to access a wide range of services from entertainment to banking and insurance.
Still, South African operators are battling with challenges including an ongoing power crisis, unemployment and vandalism of its infrastructure. While, the country has a large number of fiber providers, consolidation of the sector would assist in dealing with certain market dynamics.
Vodacom, the largest wireless carrier in South Africa, said though it is disappointed by the decision “it is important to note that the Competition Commission’s recommendation is not the end of the process.”
“Looking forward to the process with the Competition Tribunal, Vodacom intends to showcase the strong public interest and pro-competitive advantages that the proposed transaction would have on the fibre market, and the country as a whole,” it said.
The operator walked away from a large fiber acquisition with Neotel several years ago, after it faced a number of regulatory battles and legal opposition to the deal by competitors.
(Updates with Vodacom comment in seventh paragraph.)
