SEACOM is suffering
SEACOM’s profit plummeted by 77% because of increased operational costs and unfavourable unrealised forex losses.
Remgro revealed details about SEACOM’s poor financial performance in its interim results for the six months ended 31 December 2021. Remgro owns a 30% stake in SEACOM.
SEACOM has evolved since it launched a submarine cable system along Africa’s Eastern and Southern coasts in 2009.
The company now operates metropolitan, regional, and international fibre networks and a continent-wide IP-MPLS network.
It provides a suite of communications and cloud services aimed at the business and enterprise market.
Its products include high-capacity international and local bandwidth services like International private lines, IP transit, internet access, and cloud services.
Over the past few years, SEACOM acquired numerous companies, including Africell Uganda, Hirani Telecom’s metro fibre network, and FibreCo.
Growing its service offerings and acquiring numerous companies in the telecommunication space have not done much for SEACOM’s financial position.
Remgro said SEACOM only contributed a profit of R8 million to its headline earnings over the last year, down 77% from the R35 million over the previous period.
There was only marginal top-line growth which was primarily from the wholesale business. However, it was offset by increased operational costs and unfavourable unrealised forex losses.
MyBroadband asked Remgro for more information about SEACOM’s revenue, but it said they could not disclose more information based on its shareholder arrangements on disclosure of info.
Despite SEACOM’s financial challenges, Remgro is talking up the prospects of the operator thanks to increases demand in the use of data and cloud services.
“SEACOM continues to adapt to the rapidly evolving data market and investment in its submarine and terrestrial network to respond to an ever-increasing demand,” Remgro said.
Remgro added that SEACOM is also introducing a more diversified product range that allows it to capture increased market share by offering a better value proposition.
Remgro significantly increased SEACOM’s book value and intrinsic value despite the drop in profit and marginal revenue increase.
Remgro told MyBroadband the main reason for the intrinsic value increase is because of the weaker rand.
Now read: Seacom upgrades IP network with 100Gbps Ethernet
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