Frogfoot plans to keep buying smaller fibre network operators in South Africa’s suburbs as the market consolidates, but CEO Shane Chorley stopped short of ruling out a sale of the business.
“I’d be ignorant to say that we would ignore any offer,” Chorley said on the latest episode of the TechCentral Show – watch or listen below. “I would hope to say that we will be the acquirer rather than being sold.”
Frogfoot has already bought a couple of small suburban operators and wants to acquire “as many of those smaller operators as possible”, he told show host Duncan McLeod. He expects somewhat larger networks, of more than 30 000 homes, to come up for sale in the next few years, followed in time by “a much bigger consolidation of one or two of the bigger ones”.
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The mooted merger of Octotel and MetroFibre had been “going on for a while”, Chorley said, and he expected consolidation among suburban operators to continue.
Abraham van der Merwe, who leads Frogfoot, Vox and Hypa, said consolidation was inevitable because “infrastructure requires scale”. But he said Frogfoot was unlikely to be consolidated any time soon because its “long-term and patient” investors, among them the founders, intend to own the business for a very long time.
The two spoke after a DNI-led consortium invested in the businesses in a deal valuing them at R14.4-billion. Most of the money will go into townships, where Van der Merwe said fewer than two million of 12 million to 15 million homes have fibre. Frogfoot wants to lift its build rate from about 80 000 connections a year to 360 000.
That untapped market is also why Van der Merwe is not worried about operators overbuilding each other. Overbuilding splits market share and wrecks the economics, he said, and there is little reason to do it when so many homes have no fibre at all. It took about a decade to connect the 4.5 million homes in the suburbs; the township market is three times that size.
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