Vumatel’s network for lower-income families is now bigger than for middle-class and up
The number of homes passed on Vuma Reach has exceeded Vuma Core in the past year, Vumatel’s majority shareholder Remgro has revealed.
The fibre network operator’s Vuma Reach network targets households earning between R5,000 and R30,000 a month, while the Vuma Core network is aimed at families earning over R30,000 a month.
As of 30 June, Vuma Core has passed 906,315 homes and connected 384,872, while the Vuma Reach network has passed more than a million homes and connected 263,059.
The number of homes passed by the Vuma Reach network increased by nearly 56.6%, whereas Vuma Core grew by 0.7%.
Vuma Key, currently in a proof-of-concept phase in Alexandra, has passed 20,596 distribution points, and Vumatel has completed 1,919 installations.
In addition to breaking down Vumatel’s network coverage by market segment, Remgro has estimated the maximum addressable market size for each product. These are as follows:
- Vuma Core — approximately 2.2 million homes
- Vuma Reach — approximately 4.8 million homes
- Vuma Key — approximately 9.7 million homes
A breakdown of Vumatel’s figures for homes passed and connected on its networks is summarised in the table below.
| Product | Homes passed | Homes connected | Connection rate |
| Vuma Core | 906,315 | 384,872 | 42.47% |
| Vuma Reach | 1,040,453 | 263,059 | 25.28% |
| Vuma Key | 20,596 | 1,919 | 9.32% |
Based on these figures and Remgro’s market size estimates, Vuma Core effectively owns 41.2% of the maximum addressable market for its segment — ignoring overbuilds by competing networks.
Similarly, Vuma Reach and Vuma Key have 21.7% and 0.21% of their respective maximum addressable markets.
With the middle-class market being near-saturated with fibre, Vumatel believes its Reach and Key products provide a huge opportunity for growth.
Vumatel began trialling its prepaid Vuma Reach product in Mitchell’s Plain in 2019.
“We were one of the first companies in the world to do fibre-to-the-home on a prepaid model,” said Vumatel and Maziv CEO Dietlof Mare.
The company developed its Vuma Key product to target households earning less than R5,000 per month and aims to provide them with uncapped fibre for R100 per month.
Vumatel has said the product must stand on its own feet for it to succeed — it cannot depend on cross-subsidisation from its other markets. Otherwise, it will not be sustainable.
Remgro strategic investments head Pieter Uys said there is an opportunity to democratise the Internet with a product like Vuma Key.
The graph below illustrates much of each addressable market Vumatel’s products currently connects based on Remgro’s figures.
During an investor roadshow in June 2022, Maziv CEO Dietlof Mare outlined the opportunity they see in Vumatel targeting lower-income households.
“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 the company only targeted 2.2 million high-living standards measure (LSM) homes in areas like Parkhurst and Sandton, potentially limiting its growth.
“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,” said Mare.
He also explained the obstacles they faced when entering areas like Mitchell’s Plain and Soweto.
“You had unofficial forums working there. You had gangsters closing the businesses now and then. So it was just for us not possible.”
He indicated that the company was also worried about non-payment in these areas. Hence, it introduced the prepaid Vuma Reach product and now, Vuma Key.
Vumatel said it is running the Vuma Key pilot in Alexandra to measure the technical and commercial viability of rolling out networks in lower-income areas.
The network relies on backhaul links provided by Maziv-owned Dark Fibre Africa (DFA).
Remgro also provided an update on DFA’s fibre-to-the-tower (FTTT), fibre-to-the-business (FTTB), and Metro-fibre links rollouts.
Over the past year, DFA’s FTTT network grew by 0.5%, from 11,973 towers to 12,036 as of 30 June 2023.
During the same period, its FTTB network grew 4.5%, from 37,135 businesses passed to 38,815. Its metro-fibre links increased from 9,868 to 10,116 — an increase of 2.5%.
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