South Africa’s largest telecommunications provider, Vodacom, has announced it will refrain from pursuing additional mergers and acquisitions after its intended merger with fibre company Maziv was blocked by the Competition Tribunal in October.
The Competition Tribunal’s decision to reject the proposed merger came after a 26-day hearing, involving testimonies from various stakeholders, including the Competition Commission, government representatives, and competitors. Vodacom, which initially proposed the merger in 2021, aimed to expand its fibre reach across South Africa through this deal.
In a recent media call, Vodacom CEO Shameel Joosub emphasised that the group is not seeking alternative acquisition opportunities at present. “We do not wish to find ourselves entangled in regulatory proceedings for another three years,” Joosub commented. The decision comes amidst Vodacom’s announcement of a 19.4% decline in half-year earnings, attributed to start-up losses from its Ethiopian operations and currency depreciation.
Vodacom, majority-owned by Britain’s Vodafone, saw its shares fall by 4.53% following the earnings report. The telecommunications group is still awaiting a detailed statement from the Tribunal explaining the grounds for the merger block, which is expected within two months. Joosub expressed disappointment, noting that the Maziv merger would have facilitated a substantial investment in South Africa, totalling between ZAR 14 billion and ZAR 17 billion, plus an additional ZAR 25 billion in capital expenditure.
Meanwhile, Vodacom announced a 6.6% reduction in its interim dividend, responding to the impact of operational challenges and currency fluctuations. In Ethiopia, the group’s Safaricom Ethiopia venture, launched in partnership with Kenya’s Safaricom, has revised its projected break-even timeline from FY 2026 to FY 2027 due to currency impacts. Despite a 1.2% decline in reported group service revenue to ZAR 58.6 billion for the six-month period ending 30 September, Vodacom reported a normalised revenue increase of 9.9%.
Vodacom has indicated that it will review its options once the Tribunal’s rationale is received, with Joosub noting the importance of a swift receipt to facilitate a possible appeal.
