African Rainbow Capital (ARC) Investments has attached a valuation to wireless Internet operator Rain of R17.9-billion, a 7.9% increase over last year’s figure.
ARC Investments, which is controlled by businessman Patrice Motsepe, said on Tuesday that its 20.3% stake in Rain was worth R3.635-billion at end-June 2022, from R3.314-billion a year ago, giving the company an implied valuation of R17.906-billion.
In its annual results, published on Tuesday, ARC Investments said the decision to increase the valuation of Rain was driven by several factors, including:
- The business continuing to do well in the sale of both 4G and 5G products; and
- The successful acquisition of new spectrum at the March auction conducted by communications regulator Icasa. The utilisation of additional spectrum is expected to impact cash flow positively, ARC said.
The ARC fund invested an additional R56-million in Rain in the 2022 financial year. It said Rain achieved its budget of R1-billion in Ebitda (earnings before interest, tax, depreciation and amortisation) in its 2022 financial year, which ended in February. It also achieved breakeven for the first time.
After IFRS and other adjustments, Rain’s Ebitda is expected to top R3-billion for the financial year ended February 2022, ARC Investments said.
Last month, Rain hit the headlines when it said it planned to approach the board of larger rival Telkom about a potential merger. This followed the news that Telkom and MTN Group were in talks about a combination. (News of those talks lit a fire under Telkom’s share price, boosting its market capitalisation to its current R25.1-billion.)
Rain was later forced to retract its statement after the Takeover Regulation panel said it flouted regulations in making its intentions public via the media. Rain has since said it remains interested in pursuing a deal with Telkom’s board. – © 2022 NewsCentral Media