Remgro released its financial results for the six months ended 31 December 2020, which showed that Vumatel increased its revenue by 43% to R1.092 billion during the reporting period.
Vumatel is South Africa’s largest fibre-to-the-home network operator with over 19,000km of fibre assets.
It continues to grow its Active Ethernet and GPON fibre network across South Africa through various rollout initiatives.
Vumatel is already the market leader in both homes passed and active subscribers with 40% market share in both verticals.
It is now moving beyond the traditional middle-class neighbourhoods – which it initially targeted with its fibre products – to working class neighbourhoods like Mitchells Plain, Vosloorus, and Soweto.
Under its “Reach” product offering it has successfully commercialised fibre in lower Living Standards Measure (LSM) areas.
Vumatel has therefore unlocked a completely new market for fibre-to-the-home services which has been untouched for years.
These fibre infrastructure initiatives helped Vumatel to make the most of the increased demand for home broadband services when the COVID-19 pandemic and lockdown hit.
The company significantly increased revenue to R1.092 billion thanks to accumulated subscriber uptake growth and the acquisition of additional networks from a DFA subsidiary.
The uptick in revenue also helped Vumatel to increase its underlying operating earnings by 25% to R297 million.
Vumatel forms part of CIVH in which Remgro has a majority stake. DFA and Vumatel are CIVH’s largest subsidiaries.
Remgro used to own 54.7% of CIVH, but in January 2021 it subscribed for an additional 54,738 shares for R1.636 billion in a rights issue.
As a result of the new share subscription, Remgro’s interest in CIVH increased marginally to 55.2%.
The money raised through this rights issue was mainly used to reduce the CIVH group’s debt and to unlock capital expenditure facilities for further growth.
It is understood that Vumatel benefitted significantly from this rights issue and is now armed with billions to further expand its fibre network.
It is clear that Remgro wants to strengthen its already prominent position in the South African telecommunications market.
Remgro CEO Jannie Durand previously said CIVH is one of their most valuable assets as it operates in the high growth telecommunications market.
To drive this growth CIVH has assembled a top management team – former Vodacom CEO Pieter Uys as chairman, Raymond Ndlovu as CEO, and former Vodacom CTO Andries Delport as CTO.
Uys said there are many areas where CIVH can replicate Vumatel and DFA’s successful open access, wholesale business model.
They are exploring numerous new markets, including data centres, tower infrastructure for mobile networks, and rolling out a wholesale mobile network.
Should its expansion plans come to fruition, CIVH is set to become an even bigger competitor to Telkom, Liquid Telecom, and other large telecoms players.