Vumatel under fire for network problems, outages, and high prices

Vumatel is facing severe criticism for its poor network quality, prolonged outages, and lack of support while its prices are much higher than other fibre network operators.

MyBroadband has received information from prominent Internet service providers (ISPs) that Vumatel’s network quality is deteriorating.

One ISP executive, who spoke to MyBroadband on the condition of anonymity, said Vumatel seems to be “falling apart”.

He said their Vumatel clients in some areas experience downtime which lasts for days with little communication or support from the fibre network operator (FNO).

Any compensation for the downtime is allegedly laughed at by Vumatel, which means subscribers have no choice but to grin and bear it.

“Because Vumatel has a fibre monopoly in many neighbourhoods it is behaving like Telkom in the old days, with a take-it-or-leave-it attitude,” he said.

Another ISP executive said they are seeing latency problems and network outages on Vumatel, specifically in the Johannesburg region.

He added that prolonged outages seem to be increasing during load-shedding, with some clients experiencing downtime for hours or even days.

He added that Vumatel’s support quality has been declining, which puts pressure on ISPs.

The feedback from ISP executives is substantiated by complaints from Vumatel fibre clients on customer-support platforms like HelloPeter and Twitter.

The network operator is widely criticized for downtime which lasts for days, poor customer support, and high prices.

“Since yesterday I’ve had no active line and Vumatel is failing to respond to my ISP. This happened in January as well,” said one Vumatel client.

“It has been 4 days without a fibre connection through no fault of my own, and Vumatel can’t be bothered to fix it. I have to wait because I’m in a queue,” said another.

One client proposed that service providers such as Vox, Vodacom, MTN, and Telkom should consider finding alternative fibre providers.

“That will release the stress and embarrassment all around. The service from Vumatel is far below average,” he said.

Dietlof Mare
Dietlof Mare

These complaints come at a time when Vumatel is keeping prices high while its main competitor, Openserve, increased speeds and cut prices.

Vumatel’s recent decision to discontinue some of its affordable fibre packages, which will result in customers being moved to more expensive options, was also not well received.

“The moment an alternative presents itself I’m ditching Vumatel…the value proposition sucks compared to your competitors,” one Vumatel user said.

“Someone at Vuma needs to understand that connection prices are coming down – not going up all the time,” said another client.

Responding to questions about their high fibre pricing, Vumatel CEO Dietlof Mare said it “has been our aim over the last seven years to give our customers the best quality infrastructure and to do so in the most sustainable way possible.”

Mare’s argument about offering the “best quality infrastructure” could explain their higher prices, but it does not hold water if the allegations about lagging network quality and poor support are true.

CIVH

The backlash against Vumatel is happening when Remgro, through its subsidiary Community Investment Venture Holdings (CIVH), is trying to sell a stake in the company.

There is industry speculation that CIVH, which owns Dark Fibre Africa and Vumatel, has crippling debt.

One industry source told MyBroadband CIVH and Vumatel’s debt to EBIDTA (earnings before interest, taxes, depreciation, and amortization) ratio is much higher than other players.

He said Vumatel and DFA cannot take on much more debt and therefore have to find alternative ways to fund the business.

One of these ways is to charge more for services, which is now happening with Vumatel’s decision to terminate more affordable options.

Another way is to sell a stake in the company to raise capital and reduce debt. This is also in full swing.

CIVH’s management started a capital raise project in November 2019, and after a lull during the COVID-19 pandemic, reignited its search late last year.

The main challenge for Remgro is to find an investor with deep enough pockets to stomach CIVH’s eye-watering equity valuation of R19.353 billion.

With CIVH recording huge losses each year, there is a tremendous amount of goodwill baked into the valuation.

Vumatel’s high prices and alleged network deterioration, however, will make it vulnerable to competition from 5G or even overbuilds by other fibre operators.

This, in turn, will impact the CIVH’s valuation as the economic moat because its first-mover advantage is not as strong as it used to be.

MyBroadband asked Vumatel for comment about its network problems and prolonged outages, but the company did not respond by the time of publication.

Now read: Vumatel’s high fibre prices under fire

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Vumatel under fire for network problems, outages, and high prices