South African fibre-to-the-home pioneer Vumatel is receiving constant interest from bigger telecommunications companies wanting to acquire it, but the company is not yet ready to “succumb” as it still has “a lot of interesting stuff” it wants to do as an independent player.
That’s the word from Vumatel CEO Niel Schoeman, who was speaking to TechCentral in a podcast interview on Tuesday. If anything, the company will continue to play a consolidation role in the industry rather than being swallowed itself. It has already acquired Johannesburg-based Fibrehoods and Durban-based Estate Connexions.
“I suppose we are being inundated with approaches, which is natural at the moment,” Schoeman said in the podcast. “The mobile operators need to go into the fixed-line space — it’s no secret that they have to do that to provide converged services. Other infrastructure providers are expanding their footprint.
“We have some plans we still need to fulfil before we succumb, and I’m not sure we will succumb. We have a lot of interesting stuff we still want to try and do,” he said.
The regulatory environment will make an acquisition by one of the big industry players difficult, Schoeman said. “For example, Telkom acquiring us? I can’t see that ever happening. I can’t see that passing regulatory muster.”
Similarly, the dominance of the big mobile operators could also result in close regulatory scrutiny of any deal to acquire Vumatel.
Meanwhile, there are a number of smaller players that could help Vumatel consolidate its position in the market. Some smaller fibre-to-the-home operators will struggle for scale; others may go to the wall, said Schoeman.
“If you don’t build fast enough, your overheads eat you alive in the process. I just don’t know if all of them will make it in the end. Will we pay huge premiums [to buy other companies]? No. Will we pay fair value, or a discount? Sure. I think time will tell. It’s not as easy as people think to dig a trench and lay fibre. There are lessons to be learnt along the way.”
One of the opportunities Vumatel is keen to pursue is around smart cities, Schoeman said.
“We are building a telecoms infrastructure business, but it’s more of a platform for smart cities of the future. We will always be an infrastructure owner rather than a service provider. The question is, what do we do with this infrastructure to take it beyond just a telecoms play? That’s where I think the interesting bits lie in the future for us — about how we take this to another level.” — © 2017 NewsCentral Media
- For much more, listen to the podcast interview with Niel Schoeman