Regulatory stasis has slowed fibre roll-out to the poor: Jannie Durand

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Three years of regulatory stasis, which has suspended the proposed acquisition by telecommunications giant Vodacom of a 30-40% stake in fibre operator Maziv, has led to a “massive opportunity cost” for both companies and other stakeholders.

This is according to Jannie Durand, CEO of Remgro, which owns 57% of Maziv parent CIVH. Remgro’s effective stake in Maziv will be diluted through Vodacom’s acquisition – should the deal get the regulatory nod from the Competition Tribunal. Last year, the Competition Commission recommended to the tribunal that the deal be prohibited on competition grounds.

“Looking at the numbers, if we could have concluded this deal a year and a half earlier, we probably could have already spent R3-billion to R4-billion in capex in rolling out fibre to various areas. It’s been a significant opportunity cost not just for CIVH but also for the country,” Durand said in an investor call on Thursday in response to a question from TechCentral.

According to Durand, uncertainty caused by the regulatory delays have led to decreased spending on fibre roll-out by CIVH subsidiary Vumatel to the tune of some R1-billion.

According to CIVH chairman and Remgro executive Pieter Uys, low-income communities – where internet penetration rates are lowest – have the most to lose should the Competition Tribunal agree with the commission that the Vodacom-Maziv deal be blocked.

Vumatel this week commercially launched its R99/month Vuma Key product after trialling the solution in Alexandra in Johannesburg and Kayamandi in Stellenbosch. The company is now eyeing larger townships like Khayelitsha for broadband deployments, but Vumatel parent Maziv needs the huge cash-flow boost the Vodacom deal would provide. Vodacom has agreed to invest R6-billion in cash for a stake in Maziv, and has promised to add R4.2-billion in its own fibre network assets to Maziv.

Vuma Key

“The biggest impact [should the deal be blocked] is we would have to slow our ambitions to roll out Vuma Key to many parts of South Africa. We will get there, but it will probably take five or 10 years, whereas we could do it in a much shorter period of time,” Uys said on the investor call.

Uys said infrastructure investments into Vuma Reach, which is aimed at the middle-income segment of the market, may slow down but are unlikely to be as constrained as those for the lower-income segment if the Vodacom deal is blocked.

Read: Vumatel’s R99 uncapped fibre now a commercial product

The Competition Tribunal’s hearings into the transaction are finally nearing their conclusion, with two more days of hearings planned in the next two weeks and a final decision expected to follow about a month after that.

Commitments Vodacom and Maziv have agreed to include:

Investing at least R10-billion over a five-year period in network infrastructure;
Passing at least a million new homes in lower-income areas within five years;
Creating up to 10 000 new jobs;
Prioritising small business development by establishing a R300-million enterprise and supplier development fund;
Providing high speed internet to schools adjacent to where fibre is rolled out; and
Vodacom investing more than R13-billion through the transaction.

“Most of those million homes we have committed to connecting once this investment is approved we will do in the lower and lowest of LSMs (living standards measures) in the country. All in all, this deal will not just be good for both companies and their shareholders, but it will have a huge impact on South Africa and democratising the internet,” said Uys. – © 2024 NewsCentral Media