- The combined fibre infrastructure will continue to operate separately for a while.
- The deal is still subject to scrutiny by the Competition Commission.
- A group of internet service providers have already raised concern over the deal.
Remgro-controlled Community Investment Ventures Holdings (CIVH) has announced that its fibre infrastructure entities, Vumatel and Dark Fibre Africa (DFA), have joined forces in a development that could strengthen their broadband market share as competition in the country's digital landscape gains momentum.
CIVH said a new name for the service providers was yet to be announced and would in the interim continue to operate separately. The new deal is still subject to regulatory approvals.
In November, Vodacom announced that it has entered into agreements to acquire a co-controlling interest in the assets of CIVH and will hold a 30% stake in a new entity.
The CEO of CIVH, Raymond Ndlovu, said the newly established infrastructure company puts DFA and Vumatel in a position to meet this developing demand for fibre connectivity and continue providing innovative products and solutions to the market.
"The establishment of this holding company will enable both Vumatel and DFA to expand their open-access network infrastructures to meet customer requirements, with the ultimate goal of connecting more of South Africa to high-capacity fixed-line infrastructure," said Ndlovu.
Vumatel's fibre network serves 1.2 million homes, and it has deployed more than 31 000km of fibre infrastructure across the country. DFA owns and operates a long distance open-access fibre network spanning more than 13 000km and 37 000 connected circuits. It also builds, installs and maintains the network.
However, the Internet Service Providers' Association (ISPA) - whose members include Rain, Liquid Telecommunications, Openserve, Seacom and Internet Solutions – has written to the Competition Commission, raising concerns about market dominance in the industry as a result of the proposed deal.
In its submission to the Competition Commission, the association - which represents more than 200 internet service providers - takes issue with the possible deal which would see the largest company in the mobile space (Vodacom) being linked with the largest company in the fibre-to-home and national long-distance fibre space.
But Vumatel chief executive Dietlof Mare is of the view that the new company would allow them to "continue bridging the digital divide by enabling DFA and Vumatel to operate their infrastructure assets seamlessly and on an open-access basis, under one aligned strategy".
Mobile phone operators have indicated that they would use their newly acquired additional spectrum frequencies to roll out broadband services, in what is set to increase competition in the sector.