The fight over who controls home broadband in South Africa is getting a lot more serious.
South African fibre-to-the-home (FTTH) pioneer Vumatel announced on Tuesday that it has reached a “significant finance deal” with Standard Bank and now plans to spend R3bn over the next two years dramatically stepping up its home broadband footprint.
The Standard Bank investment will provide the company with the resources it needs to speed up the delivery of fibre broadband and expand into new markets, it said.
Vantage Capital will provide mezzanine financing.
Though neither Vumatel nor Standard Bank is saying exactly how much money is involved, they have described it as “one of the largest debt capital-raisings of its kind in the FTTH industry to date”.
Vumatel CEO Niel Schoeman said in a statement: “It is important that South Africa keeps pace with the rest of the world. We need to ensure that we invest in long-term sustainable infrastructure that can support the growth in demand for high-speed connectivity. That is why we plan to invest R3bn over the next two years in fibre-optic networks to service the residential sector.”
The deal with Standard Bank, with an agreed drawdown facility, will facilitate the exponential growth of Vumatel, the company said.
Since it first deployed fibre broadband in Parkhurst in Johannesburg 18 months ago — at a cost of R30m — Vumatel has expanded to a range of suburbs in both Gauteng and Cape Town.
It now appears that it sees an opportunity to take the fight with incumbent fixed-line operator Telkom — which has also promised to step up its FTTH roll-out plans in the coming years — to an entirely new level.
Standard Bank will become the lead financier of Vumatel’s bid to expand its business “exponentially”, the operator said.
The deal was structured through Standard Bank’s business acquisition team, which concentrates on debt-focused financing for top-line commercial clients. — © 2016 NewsCentral Media