STELLENBOSCH-based investment giant Remgro is making a big bet on the local fibre optic industry.
The group’s latest set of results shows that Remgro bumped up its investment in Community Investment Venture Holdings (CVH) by a hefty R2.86 billion after a rights issue.
Remgro holds a 54% stake in CIVH, which in turn has the fast growing Dark Fibre Africa and Vumatel fibre optics operations as its main investments.
The intrinsic value of Remgro’s investment in CIVH is more than R8 billion – making it one of the biggest holdings in the group’s more than R230 billion investment portfolio.
Remgro has also lent CIVH R100 million.
DFA has been an incredible success story over the past few years. Revenue now tops the R3.5 billion mark – with the 23% annual increase driven by 29% growth in all important annuity income.
Remgro estimated that DFA’s monthly annuity income was R163 million – well ahead of the R136 million generated in the 2018 financial year.
Most impressive, is that DFA now covers a sprawling 13 600 km of fibre network in major urban areas and long-haul routes. Last year the company covered a network measuring 10 544km – which clearly illustrates the rapid roll out of fibre.
Vumatel, which was only recently acquired by CIVH, is the other leg of the Remgro’s fibre optic network sprint.
Vumatel is a leader in the Fibre-to-the-Home (FTTH) market with a network that spans over 16 000 km.
Remgro reported recently that Vumatel’s profits and subscriber uptake levels have shown a healthy improvement since the business was acquired in June 2018. Remgro adds that Vumatel’s year-to-date performance is ahead of expectations measured against the 2020 financial year budget.
One of the big advantages of Vumatel’s network is that it also provides 1Gbps free uncapped access to its network to every school that it passes.
The third – and largely unsung – leg of the fibre optic thrust is Remgro’s 25% stake in undersea cable network provider SEACOM.
While it might be some time before Remgro makes real money from SEACOM, this is a strategic long term investment in the fibre optic infrastructure.
Remgro CEO Jannie Durand said good progress had been made in establishing the “SEACOM business”.
He also disclosed that SEACOM had completed the acquisition of FibreCo, and that the Bloemfontein node was now connected to SEACOM’s undersea cable network.
While the fibre optic ventures are not quite as big as Remgro’s core investments in healthcare, food and beverages and financial services, the progress of these entities is worth watching remembering the group’s successes in backing cellular technology at its fledgling stage when it backed the Vodacom Group in the mid-nineties.
