Huge plans for old Virgin Mobile South Africa

Huge Group says that its acquisition of Virgin Mobile South Africa is a piece of an enormous puzzle that it is assembling into a larger platform of investments.

“The value of this investment will far surpass the cost of making,” Huge Group CEO James Herbst said.

Virgin Mobile was a mobile virtual network operator (MVNO) in Cell C’s network that pulled out of South Africa in September 2021.

It had entered business rescue ten months earlier. The company said it was already in a vulnerable position when the Covid-19 pandemic hit.

“The onset of the pandemic exacerbated the issues the company was facing,” it stated.

After Virgin divested from the company, it became Tethys Mobile and switched from offering consumer-focused services to being an MVNO enabler.

Huge Group announced its acquisition of Tethys in July 2022, saying it wanted its software and technology platform, as well as related intellectual property.

Tethys exited business rescue and was renamed Huge Digital.

Virgin Mobile South Africa’s former CEO, Zak van de Merwe, who stepped down in 2021, later joined Huge Group and now serves as chief operating officer.

Zak van de Merwe, Huge Group COO and former Virgin Mobile SA CEO

Huge Group’s latest annual financial results revealed that it has advanced secured loans of nearly R111 million to Huge Digital.

“The loan is secured through the cession and pledge agreement executed on 10 November 2021 between Huge Group and Tethys Mobile,” it stated.

“Tethys Mobile pledged the IT Intellectual Property to Huge Group as a continuing general covering collateral security for the payment in full of all the secured obligations as set out in the agreement.”

Herbst said their focus is less on their income statement and more on their balance sheet and the quality of their asset base.

“What we try to accomplish is the building of a great investment platform, fortifying it, making good investments, and then leveraging these by identifying synergies and creating value,” he said.

“This is not always a one-day game.”

He explained that their Virgin Mobile acquisition was fifteen years in the making.

“We have been engaging with the various stakeholders of Virgin Mobile South Africa for almost 15 years after recognising its latent potential,” said Herbst.

“Over this time period, we made three unsuccessful business combination proposals, only to succeed on the fourth occasion.”

Herbst said they finally closed their acquisition of Virgin Mobile South Africa on 17 November 2023.

“Huge Digital owns a tier 1 global telecommunications software-as-a-service platform that will over time replace three homegrown software platforms,” he said.

“These are currently owned, operated, and maintained by some of the companies in our portfolio.”

Herbst said their investment in Huge Digital marks their entry and involvement in next-generation business models.

“This investment is more than a platform-as-a-service investment, it is an investment that adds to Huge Group’s own ‘investment platform,’” said Herbst.