DFA staff retrenchments planned

Dark Fibre Africa (DFA) is embarking on a restructuring process that will see significant staff cuts at the wholesale fibre infrastructure provider.

DFA started rolling out fibre infrastructure in 2007 to transmit metro and long-haul telecommunications traffic.

To date, the operator has deployed over 13,000 km of ducting infrastructure in major metros, secondary cities, and smaller towns.

DFA also owns four subsidiaries — MCT Telecommunications, Conduct, MDT, and SqwidNet.

DFA also owned SA Digital Villages, but this company merged with Vumatel in April 2020 after the transfer of SADV’s wholesale fibre network assets to Vumatel.

One of DFA’s biggest subsidiaries, SqwidNet, started retrenching staff in mid-2021. This was done to keep its network online after low revenue growth over the past few years.

Staff cuts have now also hit DFA, which said reducing its headcount is necessary to remain competitive.

The company said the impact of the Covid-19 pandemic, which included a contraction in economic growth and the addressable market for services, was a big driver behind the decision.

DFA added that inflationary cost pressures and aggressive price competition in the market were further forced it to re-look its efficiencies.

The company said it would be consulting with the affected employees on a range of restructuring options. This process is expected to be concluded by the end of March 2022.

The planned retrenchments follow two months after Vodacom announced a deal to acquire a 30% co-controlling stake in Vumatel and Dark Fibre Africa for a total transaction value of R10.2 billion.

Following the transaction, Vodacom will hold a co-controlling 30% equity interest in a newly formed InfraCo entity. The new entity has yet to receive its name.

The InfraCo entity will contain all of the material assets currently owned by DFA and Vumatel, as well as certain Vodacom owned fibre assets.

The deal is subject to regulatory approvals, which can take a long time to happen.

The amount Vodacom will pay is linked to the earnings before interest, taxes, depreciation, and amortization (EBITDA) of Vumatel and DFA at the time the deal is approved.

It makes sense for Remgro to cut costs at DFA — such as the planned staff cuts — before the deal is concluded to increase the amount it will get from Vodacom.

Now read: SqwidNet down, but not out

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DFA staff retrenchments planned