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  • Vumatel rakes in R1bn as DFA’s revenue remains flat

Vumatel rakes in R1bn as DFA’s revenue remains flat

Admire Moyo
By Admire Moyo, ITWeb news editor.
Johannesburg, 25 Mar 2021

Vumatel’s revenue, for the six months ended 31 December 2020, increased to R1 billion compared to the prior period.

This emerged when JSE-listed Remgro this morning announced its financial results for the period.

Remgro is the parent company of Community Investment Ventures Holdings (CIVH), which controls fibre-optics companies Dark Fibre Africa (DFA) and Vumatel.

While Vumatel notched up a billion rand, CIVH’s contribution to Remgro’s headline earnings for the period under review amounted to a loss of R209 million (2019: a loss of R197 million).

Excluding interest paid to Remgro, CIVH’s contribution to Remgro’s headline earnings for the comparative period amounted to a loss of R219 million.

Remgro notes the underlying performance of the business improved due to a 17% increase in revenue, coupled with cost reductions in the current year.

The group is operationally cash-generative and reinvested in excess of R500 million of operating cash flow during the period into expanding its operations and network footprint, says Remgro.

It points out the Vumatel group’s revenue for the period increased by 43% to R1 billion compared to the prior period, driven by accumulated subscriber uptake growth for the period and the acquisition of additional networks from a DFA subsidiary.

Vumatel is an open-access fibre-to-the-home (FTTH) provider. It provides FTTH in residential suburbs and has in excess of 19 000km of fibre assets.

The company leases its infrastructure to Internet service providers (ISPs), which, in turn, provide broadband retail Internet services to end customers.

According to Remgro, Vumatel is the FTTH market leader in homes passed and active subscribers in SA, achieving approximately 40% market share in both verticals.

It points out that infrastructure initiatives allowed the Vumatel business to successfully commercialise fibre into the lower living standards measure areas under its “Reach” product offering.

Key focus areas for the business remain the extension of its Active Ethernet and GPON networks, and into the secondary cities market while creating expansion capability into “Reach” areas such as Mitchells Plain, Vosloorus and Soweto.

“COVID-19 accelerated the requirements for data and, in turn, assisted in the performance of the FTTH business during the period. Underlying operating earnings increased by 25% to R297 million,” says Remgro.

Meanwhile, DFA is the premier open-access fibre infrastructure and connectivity provider in SA, says Remgro, adding it builds, installs, manages and maintains a fibre network to transmit metro and long-haul telecommunications traffic, which is leased to its customers (telecommunication companies and ISPs using an open-access wholesale commercial model).

DFA has in excess of 13 000km of fibre assets in the ground and owns fibre networks in Johannesburg, Cape Town, Durban, Midrand, Centurion and Pretoria, as well as other smaller metros, such as East London, Polokwane, Tlokwe, Emalahleni and George.

According to Remgro, DFA’s current book value of the fibre-optic network is in excess of R10 billion. The network uptime for the year under review was 99.985%, and the mean time to repair was less than 2.5 hours, well above industry standards, it notes.

“The DFA revenue model adapts to the customers’ needs, and DFA offers flexible payment profiles, with a mix of an upfront amount and a monthly annuity, or solely annuity-based with multi-year contracts of mostly up to 15 years,” says the company.

“The future value of the current annuity contracts (excluding open orders) is in excess of R10 billion,” it adds.

The DFA group’s revenue for the six months ended 30 September 2020 remained flat at R1.1 billion (2019: R1.1 billion).

Remgro points out the underlying performance of DFA’s core business increased by 8%, with annuity income increasing to R187 million per month at 30 September 2020 (30 September 2019: R174 million per month).

It explains this was offset by reduced income following the acquisition of DFA’s FTTH network by Vumatel and lower construction services revenue. Underlying operating earnings increased by 47% to R232 million.

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