Vuma Core, Vuma Reach, and Vuma Key — Vumatel’s three services explained
Remgro-owned Vumatel offers fibre products for a range of incomes in South Africa, and its network expansion has increased rapidly.
From connecting around 70,000 homes a year, the fibre network operator now connects 60,000 to 70,000 per month.
Its Vuma Core product targets high-income households earning more than R30,000 a month, while Vuma Reach is aimed at lower-income families bringing home between R5,000 and R30,000 monthly.
The operator has also announced plans to launch Vuma Key to provide uncapped fibre connectivity for less than R100 a month. Vuma Key will be aimed at households earning less than R5,000 a month.
According to Remgro’s latest investor presentation, this is the biggest income bracket in South Africa, with around 9.7 million homes that Vumatel could connect.
When Vumatel first launched, it targeted only high-income households through its Core networks. It estimates there are around 2.2 million households in this bracket.
This meant it was missing out on approximately 14.5 million lower-income homes — 9.7 million earning less than R5,000, and 4.8 million earning R5,000 to R30,000 per month.
During the presentation, Vumatel CEO Dietlof Mare explained the opportunity the fibre network operator (FNO) has to expand its network in the country and close South Africa’s connectivity gap.
“The opportunity for us is twofold. We are sitting with a super unpenetrated market at this point. We’ve got 17.6 million homes. We’ve got very bad copper infrastructure that can’t create this gap close,” Mare stated.
“And we’re sitting there in the middle of this with the biggest access network, and the biggest network that can connect homes.”
He said that as of the FNO’s launch, it only targeted approximately 2.2 million homes in high-living standards measure (LSM) areas like Parkhurst and Sandton with its Core networks, which potentially limited its expansion.
“We focussed only on the high LSMs because we could never in our minds get a solution to roll this out to the lower LSMs,” he said.
Vumatel CEO Dietlof Mare
“You had unofficial forums working there. You had gangsters closing the businesses now and then. So it was just for us not possible.”
In addition to the issues of unofficial forums and gang influences in lower-LSM areas, Vumatel was also concerned about getting payment from people who use its services.
“Then we sat down and decided one day, why don’t we launch a prepaid model into the fibre-to-the-home model,” Mare said.
Vumatel began trialling its Vuma Reach product — aimed at the estimated 4.8 million households earning R5,000 to R30,000 monthly — in Mitchell’s Plain in 2019 on a prepaid basis.
“We were one of the first companies in the world to do fibre-to-the-home on a prepaid model,” Mare stated.
He explained that this addressed the debt collection concerns it had relating to providing connectivity in lower LSM areas and offered a lower price point to those wanting to sign up.
Mare added the FNO’s Vuma Reach product had been successful and that the trick regarding such rollouts was getting the community to buy in like it did in Mitchell’s Plain.
“We created a community purpose base in line with the values of the group, and we created this in those communities where the people became the promoters of the product,” he said.
“The people actually then started building the networks.”
“In the beginning, we could, at maximum, build [connect] 70,000 homes a year. Now we’re building [connecting] 60,000-70,000 homes a month,” he added.
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