DFA and Vumatel Drive South Africa’s Fibre Future Amid Economic Challenges

CIVH is active in the telecommunications and information technology sectors. The key operating companies of the group are Dark Fibre Africa Proprietary Limited (DFA) and Vumatel Proprietary Limited (Vumatel), which construct and own fibre-optic networks. Following implementation of an internal restructuring during 2023, DFA and Vumatel are now 100% held subsidiaries of Maziv Proprietary Limited (Maziv), a newly formed wholly owned subsidiary of CIVH.

DFA is the premier open-access fibre infrastructure and connectivity provider in South Africa. It builds, installs, manages and maintains a fibre network to transmit metro and long-haul telecommunications traffic, which is leased to its customers (telecommunication companies and internet service providers (ISPs)) using an open-access wholesale commercial model. DFA has in excess of 14 000 km of fibre assets and owns fibre networks in Johannesburg, Cape Town, Durban, Midrand, Centurion and Pretoria, as well as in smaller metros, such as East London, Polokwane, Tlokwe, Emalahleni and George, to name a few.

Vumatel is an open-access fibre-to-the-home (FTTH) provider and leases its infrastructure to ISPs, who in turn provide broadband retail internet services to its end customers.

CIVH has a March financial year-end and therefore its results for the 12 months ended 31 March 2024 have been included in Remgro’s results for the year under review. The contribution of CIVH’s operations to Remgro’s headline earnings for the year under review amounted to a loss of R75 million compared to a profit of R206 million in the prior year. The decrease in CIVH’s earnings is mainly due to higher finance costs resulting from increased interest rates, higher maintenance and security costs to ensure high network uptime and the continued impact of the tough economic environment on consumers and persistent competition in the market.

The group is operationally cash generative and has pivoted its capital allocation to reinvest any excess operating cash flow and capital into increasing its uptake, rather than materially expanding its network footprint as in prior years.

Vumatel is the FTTH leader in both the homes passed and homes connected market in South Africa achieving a market share of approximately 36% measured on either of these two basis. Vumatel remains a growth asset for the group as it continues infrastructure expansion into identified lower Living Standards Measure (LSM) areas and accelerating connections in both its traditional core network and lower reach LSM areas.

Vumatel revenue for the year under review increased by 3.2% to R3 543 million compared to the prior year of R3 432 million, driven through 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.

DFA revenue for the financial year ended 31 March 2024 increased by 2.3% to R2 715 million (2023: R2 653 million) driven by demand in its fibre to the business (FTTB) vertical.

Maziv continues to support various CSI initiatives aimed at creating sustainable ecosystems in the communities in which the business operates. The goal is to contribute meaningfully and sustainably to these communities leading to strong ties that talk to the essence of the brand, a distinction that will set Maziv apart from the competition. Focus areas include education, safety, environment and healthcare. The business remains committed to its schools project, where 768 schools have been connected with 1 Gbps internet service offering.