Nicola Mawson
Maziv’s ambitious plans to rapidly scale its fibre network across South Africa have hit a significant roadblock following the Competition Tribunal’s decision to block a crucial merger with Vodacom.
This merger was poised to involve a staggering R6 billion cash infusion from Vodacom into Maziv for a 30% stake in return, alongside an investment in infrastructure worth R4.2bn aimed at expanding access to fibre broadband for millions of South Africans.
In a candid conversation with Business Report last week, Maziv’s CEO Dietlof Mare outlined the implications of the Tribunal’s ruling.
Mare noted the severity of the situation, stating that without the essential support from Vodacom, the company cannot pay down debt and raise cash under these circumstances.
Last year, Standard Bank helped refinanced R25bn in debt for the company, acting as joint mandated lead arranger and bookrunner in what was 2023’s South Africa’s largest debt transaction. For this deal, the bank won the 2024 Investment Bank of the Year for Africa by The Banker Awards.
Mare would not comment on how the Competition Tribunal ruling could affect this debt, citing the fact that Vodacom may appeal the Tribunal’s ruling. Had the deal been allowed, it would have created South Africa’s largest fibre network. The Competition Commission had initially also opposed it, arguing it would create a monopoly.
The Tribunal has yet to provide reasons for blocking the deal, and Vodacom is awaiting the paperwork before deciding whether to appeal.
Maziv was founded in May 2022 through Dark Fibre Africa (DFA) and Vumatel being placed under the control of Remgro and New GX-owned Community Investment Ventures Holdings. The strategic motive behind this company was to grow its network as well as its position as a leader in the fibre-to-the-home (FTTH), fibre-to-the-business (FTTB) and fibre-to-the-tower (FTTT) sectors.
As a result, Maziv started off with a 15 000km network from DFA and a customer base of two million homes, of which a million are in under-serviced areas, passed via Vumatel.
Maziv also took the decision to invest R400 million in upgrading DFA’s network footprint and infrastructure in three-phases over an 18-month period as it sought to rapidly scale.
Mare said Maziv was not created on the premise that the deal with Vodacom would go ahead, but rather with the aim of expanding its network, especially in under-served areas.
He said the company currently has a market share of about 30% in a country in which there are 17 million homes, of which some six million have access to a fibre line running past their house.
“I think we are connecting South Africa; you know, I think that’s good, connecting people,” Mare said.
“I think if you look at our purpose and our belief and our values, I think that's the key thing… My end game is to connect as many people as quickly as possible.”
However, Mare noted that capital was key to expand the company’s reach and meet its minimum target of another million homes covered in five years.
As part of the scuppered deal, Vodacom had pledged an investment of about R10bn over five years, mostly in low-income areas. It would also have run fibre past a million homes during the same period, while also creating 10 000 jobs.
However, without Vodacom’s cash injection, the company cannot expand its network rapidly and will have to see to monetise the assets it has in the ground through trying to persuade people who have fibre running past their homes to connect to the pipe.
Mare said banks were not currently funding capital expansion. He added that operators were also slowing down on coverage, with only 80 000 homes being passed in a quarter, down from 350 000 previously.
“This whole market is slowing down radically,” he said.
Mare explained that the models to roll out fibre in under-serviced areas “becomes tough”.
However, he believes that Maziv’s solution of providing uncapped fibre at R99 a month, a product it has trialled in Johannesburg township Alexandra, was the solution.
“The banks are now absolutely pulling back.”
BUSINESS REPORT