Remgro-owned DFA and Vumatel struggling

DFA and Vumatel have plummeted to last and second last, respectively, in the latest Internet Service Providers’ Association (ISPA) rankings, pointing to problems at these two operators.

Remgro owns 57% of CIVH, which in turn owns the fibre-to-the-home operator Vumatel and wholesale fibre-infrastructure provider Dark Fibre Africa (DFA).

CIVH’s interests in Vumatel and DFA are housed under Maziv, which was formed in anticipation of the looming Vodacom acquisition.

Vodacom and Remgro penned a deal where the mobile operator will acquire up to 40% of Maziv through a combination of assets of R4.2 billion and cash of at least R6.0 billion.

However, in August 2023, the Competition Commission recommended that the Competition Tribunal prohibit the proposed transaction.

Remgro and CIVH remain committed to the proposed transaction and will argue their case before the Competition Tribunal on 24 May 2024.

DFA and Vumatel were doing well when the deal was signed, with rapidly growing revenue and fast-improving earnings.

However, the situation has deteriorated significantly since then. The company’s mounting debt and higher interest payments are crushing it.

Remgro’s results for the six months to 31 December 2023 revealed that CIVH’s earnings plummeted by 97% compared to the same period the previous year.

The financial situation has reached such concerning levels that Vumatel was forced to significantly cut its capital expenditure and freeze debt.

The latest research from South Africa’s Internet industry association, ISPA, shows that problems at Vumatel and DFA stretch far beyond finances.

The most recent Fibre Network Operator (FNO) perception survey revealed that Vumatel and DFA have suffered a big decline in confidence.

The survey, conducted in February 2024, measured the views of Internet service providers (ISPs) of fibre network operators.

ISPA’s members were asked to rate the FNOs they do business with across eleven criteria on a scale of 0 to 10.

The results revealed that trust in DFA plummeted from 5.8 to 5.0, while Vumatel declined from 6.0 to 5.2.

More concerning is that DFA and Vumatel are now the worst-ranked fibre network operators in ISPA’s survey.

DFA performed very poorly on reliability, support, communications, business processes, and software systems.

Vumatel declined because of its poor value-for-money, support, and communications.

The table below shows how DFA and Vumatel stacked up against other fibre network operators in the market.

Fibre Network OperatorAve. score – Aug 2023Ave. score – Feb 2024Change
Link Africa5.96.8+0.9
Liquid Intelligent Networks4.75.9+1.2
Dark Fibre Africa5.85.0-0.8