R14.4 billion deal to bring fibre to townships across South Africa

A South African conglomerate’s telecommunication units raised R14.4 billion to expand its broadband services in the continent’s biggest economy.

Vox and Frogfoot, units of the Johannesburg-based Vivica Group, raised R8.4 billion in equity funding and R6 billion of debt, said Abraham van der Merwe, chief executive officer of the two companies.

Hypa Fibre, a unit of Vox, was also part of the fundraising deal, he said. 

After connecting South Africa’s affluent business areas and suburbs, companies are targeting so-called townships — where apartheid-era governments forcibly relocated people of colour — with broadband connections.

From banks to retailers, companies are ramping up plans to tap the nation’s large informal economy that exists in residential areas across the country. 

“We are anticipating quadrupling our fibre deployment to about 360,000 homes a year, mostly rolling out in townships,” said Van der Merwe.

There’s an opportunity to connect as many as 15 million homes, he said. That compares with 4.5 million homes with high-speed internet connections. 

The equity transaction included new investors such as a group led by DNI and EM-Three Investments, among others, Van der Merwe said.

“There is a lot of strategic overlap between some of the things we do in our group and some of Frogfoot’s needs,” said DNI CEO Ryan Noach.

“We hope to add value beyond just the capital that we are investing.”