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Is listing an option for Remgro telecoms subsidiary?

Is listing an option for Remgro telecoms subsidiary?

Remgro could look to listing its telecoms investments after its 51%-held subsidiary Community Investment Ventures Holdings (CIVH) snapped up a 35% stake in fibre network provider Vumatel last week.

It seems CIVH will look to combining Vumatel with its fast-growing fibre network specialist Dark Fibre Africa (DFA), in a bid to consolidate a slab of SA’s expanding broadband network.

Remgro CEO Jannie Durand confirmed on Friday CIVH had an option to acquire the remaining shares in Vumatel at a later date. A JSE listing of an enlarged fibre business could be on the cards if there was a need to raise fresh capital to fund growth.

Remgro was a pioneering telecoms investor in the late 1990s, having backed then unlisted service provider Vodacom. This strategic stake was sold to Vodaphone in 2009.

While Remgro also holds a 30% stake in undersea cable specialist Seacom, the last 10 years has seen Remgro building a formidable position in CIVH, regularly investing more capital in DFA’s growth. DFA is now considered the gem in Remgro’s unlisted portfolio.

Not much is known about unlisted Vumatel’s financial status but it recently outlined plans to connect SA’s townships with fibre through an uncapped 100 Mbps monthly package at R89.

The longer-term plan is to connect all townships in the Vumatel network, which could entail as many as 10-million residents in 2.5-million homes in the next few years.

Remgro’s 51% stake in CIVH is valued at about R4.9bn based on last reported interim numbers that showed revenue of R903m and earnings before interest, tax, depreciation and amortisation of R545m in the six months ended September 2017.

DFA has annuity income of R113m a month and the book value of its fibre optic network is estimated at R6.8bn. Remgro has also recently indicated that DFA’s future value of its current annuity contract base is worth more than R12.2bn.

As at the end of September 2017, DFA’s fibre network had covered 10,138km in major metropolitan areas, small towns and long-haul routes.


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