DFA 'in talks' to buy Vumatel - TechCentral

DFA ‘in talks’ to buy Vumatel

Dark Fibre Africa (DFA), the fibre telecommunications company in which JSE-listed Remgro holds a 50.9% stake, is in talks to buy fibre-to-the-home broadband infrastructure provider Vumatel, according to well-placed sources.

If the deal happens, it is likely to be one of the biggest in South Africa’s telecommunications industry in years. Vumatel is believed to be valued at multiple billions of rand.

Vumatel CEO Niel Schoeman declined to comment on “market speculation”. DFA said only that it “does not respond to market speculation”. It’s not known how DFA would fund the deal, assuming it goes ahead.

Apart from Remgro, DFA’s shareholders include New GX Capital and Community Investment Holdings.

Though DFA has dabbled in the consumer broadband market — most notably with builds around Parkview in Johannesburg, as well as in a few areas in Sandton and Stellenbosch — the company has focused most of its energy up to now on national and metropolitan links as well as fibre-to-the-business precincts.

However, in 2016 it acquired a stake in SA Digital Villages, a fibre-to-the-home specialist. In 2014, it bought business fibre infrastructure provider Conduct Telecommunications, at the time led by Johan Pretorius, who is now Vumatel’s chief operating officer.

Vumatel, which began deploying home fibre in the Johannesburg suburb of Parkhurst in 2014, has quickly expanded to provide coverage across the city. It has also begun deploying infrastructure in Cape Town and Durban and recently acquired a large portion of the fibre-to-the-home footprint belonging to Link Africa.

Schoeman revealed in an exclusive interview with TechCentral earlier this month that the company, which has raised hundreds of millions of rand in funding from Investec and Standard Bank, now also plans to start building low-cost uncapped fibre networks in the townships in the major metropolitan areas. It is starting with a proof-of-concept pilot in Alexandra, near Sandton in Johannesburg, to deliver uncapped 100Mbit/s fibre broadband for R89/month.

Open access

Vumatel operates an open-access fibre network, which third-party Internet service providers use to provide Internet access to consumers. It competes head-on with Telkom’s wholesale division, Openserve.

In May, DFA concluded a new funding round of R1.2bn. This new funding followed the extension and increase to R1.1bn in December 2016 of its revolving credit facility. Standard Bank and Sanlam joined DFA’s existing syndicate of long-term funders. Govanhill Capital arranged the finance.

Vumatel CEO Niel Schoeman … no comment on “market speculation”

DFA said the new debt facilities would be used to refinance a maturing term loan and to finance the continued expansion of its open-access metro fibre footprint nationwide.

The lender syndicate comprised a balance of banks, fund managers and financial companies: Absa, Futuregrowth Asset Management, Investec Asset Management, the KZN Growth Fund, Liberty Group, Rand Merchant Bank, Sanlam, Standard Bank and Stanlib Asset Management.

“The revolving credit facility was provided by DFA’s syndicate of banks, comprising Rand Merchant Bank, Absa and Standard Bank,” DFA chief financial officer Cilliers Steyn said at the time. DFA started rolling out its network in South African cities during October 2007 and has more than 10 000km of route fibre.  — (c) 2017 NewsCentral Media

7 Comments

  1. Ofentse Letsholo on

    Hmmmmm… Vumatel has been doing good on its own but it won’t hurt getting money also from another father. What I do worry about is the opportunities DFA may block once they have half of Vumatel. Remember what happened to MTN and Afrihost?! Afrihost couldn’t do other things because of MTN and they immediately did them soon as they bought back what MTN had bought. I doubt DFA would have approved of Vumatel going to Alex for fibre deployment. We’ll just have to wait and see how all of this will end up.

  2. I don’t really care who owns who! I just want some service provider to lay fibre in my area.

    I deal with Liquid Telecom (Neotel) for my company, and when I asked them when they are going to start laying fibre-to-the-home, their response was that they don’t intend doing it any time soon as it is not profitable. So, I ask the question, why are so many other companies laying down fibre-to-the-home if it is unprofitable.

  3. Monopolies?

    These two guys combined are minnows – combined sales are probably less than 2% of the total wholesale market. Remember they are both open access wholesalers, meaning that they create opportunities for small startups to compete.

    If they dont go and buy quite a few more companies and steal a lot of market share from incumbents, they probably wont survive.

    Then you will have a monopoly!!!

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