Vumatel parent suffers

Vumatel and DFA’s revenue increased, but higher finance, maintenance, and security costs pushed their holding company into a loss.

This was revealed in Remgro’s financial results for the year ended 30 June 2024, which the company described as a challenging period.

Remgro owns 57% of Community Investment Ventures Holdings (CIVH), which, in turn, owns 100% of Maziv, which houses CIVH’s current interests in Vumatel and DFA.

Remgro revealed that CIVH’s contribution to its headline earnings amounted to a loss of R75 million, down from a profit of R206 million the year before.

This means that Maziv swung from an approximate profit of R361 million in 2023 to an approximate loss of R132 million in 2024.

It should be noted that this is an approximation, as the full details about the finances have not been shared.

Remgro explained that the decrease in earnings is mainly due to higher finance costs resulting from increased interest rates.

Other negative factors included higher maintenance and security costs to ensure high network uptime and the tough economic environment.

Vumatel’s revenue for the year ended 31 March 2024 increased by 3.2% to R3 543 million, driven by its fibre infrastructure expansion programme and subscriber uptake growth.

The Reach network expanded by 12% with Reach homes passed exceeding one million and Reach subscribers increasing by 39% year-on-year.

Dark Fibre Africa (DFA) revenue for the year ended 31 March 2024 increased by 2.3% to R2 715 million, driven by demand for its fibre in the business market.

Remgro and CIVH have signed an agreement with Vodacom to buy 40% of Maziv through a combination of assets of R4.2 billion and cash of at least R6.0 billion.

As a result of the proposed transaction, Remgro’s indirect interest in DFA and Vumatel will dilute with the entrance of Vodacom as a shareholder.

However, Remgro will also obtain an indirect interest in the fibre assets contributed by Vodacom.

During August 2023, the Competition Commission of South Africa announced its non-binding recommendation to the Competition Tribunal, to prohibit the transaction.

The final phase of the regulatory approval process, which started on 24 May 2024, is still ongoing, and a decision is expected in November 2024.

Remgro and CIVH said they remain committed to the proposed transaction. They believe it will deliver significant benefits to South African consumers.

These benefits include positive social impacts relating to critical issues such as the democratisation of the Internet in lower-income areas.

It will also drive greater access to cheaper fibre in South Africa, which, in turn, is expected to create jobs and grow the economy.