CIVH’s Vumatel acquisition approved, with conditions

The Competition Tribunal has approved the acquisition by Remgro’s Community Investment Ventures Holdings (CIVH) of Vumatel, but has attached long-term conditions to the sale.

In approving the deal, which will give CIVH sole control of Vumatel, the tribunal said the merged entity must continue to use the open-access model for service provision for certain of its services. The new entity must also improve its transparency mechanisms and agree to an obligation not to discriminate against its customers who compete with Vumatel.

“The conditions also include two public-interest obligations, one of which is confidential due to business sensitivity,” the tribunal said in a statement on Monday. “The other provides for the merging parties to provide free uncapped fibre services to public and private schools that its networks bypass.”

The conditions apply for a period of 10 years from the date of the implementation of the merger.

Vumatel has quickly emerged as a significant player in the home fibre broadband market, leading a challenge to market leader Telkom’s Openserve in the provision of fixed Internet infrastructure.

The tribunal noted that CIVH already controls Dark Fibre Africa (DFA), which provides fibre backhaul to Vumatel and other service providers. It also control SA Digital Villages, another home fibre provider.

CIVH is jointly owned by Industrial Electronic Investment (IEI) and New GX. IEI is controlled by Venfin, which is, in turn, controlled by Remgro.

‘Horizontal competition concerns’

“The Competition Commission, which assesses large mergers before referring them to the tribunal for a decision, evaluated the merger and raised vertical competition concerns in the proposed transaction because DFA is considered to be the largest backhaul provider, assessed on a regional basis,” it said.

“The commission had also raised horizontal competition concerns as it had found that Remgro indirectly controls Octotel, a Cape Town based competitor to Vumatel.”

Octotel opposed the sale of Vumatel to CIVH, arguing that it also relies on DFA to provide it with backhaul services in the Western Cape. Octotel had raised concerns in relation to the proposed merger and was permitted to make submissions to the tribunal as an “intervenor”. Octotel urged the tribunal to prohibit the merger, arguing that the proposed conditions were insufficient to prevent CIVH, via DFA, favouring Vumatel at the expense of rivals.  — © 2019 NewsCentral Media