Tau appeals block of $730m Vodacom deal

South Africa’s Trade, Industry and Competition Minister Parks Tau is appealing an order by the nation’s Competition Tribunal that blocked Vodacom Group’s R13.2-billion deal to buy a stake in Remgro’s fibre businesses.

Tau, whose ministry also oversees the competition regulators in the country, is seeking to overturn the decision and allow the merger to proceed, according to the appeal document seen by Bloomberg News.

This rare move by the newly appointed minister is a blow to South Africa’s antitrust regulators, who blocked the acquisition in a shock decision in October. The parties involved in the deal have argued that significant investment is needed in South Africa, especially for digital infrastructure in lower income areas.

“The South African government backing for Vodacom’s acquisition of a stake in fibre operator Maziv, could add to pressure on the Competition Appeals Court to approve the deal,” Bloomberg Intelligence analyst John Davies said. “Still, a final decision may be many months away and deal terms are being renegotiated, which is reasonable, given it was announced three years ago.”

A large number of parties have been called to respond to the appeal, including Vodacom’s biggest cross-town rival MTN Group. The industry is largely supportive of the deal, as there is an agreement that consolidation is needed for future growth prospects.

As part of Vodacom’s deal, the plan is to invest in fibre rollout in low-income areas, spending R10-billion and providing 10 000 jobs, the company said previously.

“We support the appeal as consolidation is needed in South Africa to support accelerated investment in digital infrastructure and services,” MTN CEO Ralph Mupita said in response to questions. “South Africa is lagging this important global trend at a time technology is accelerating and transforming societies.”