Vodacom is becoming one of South Africa’s biggest fibre-to-the-business (FTTB) and fibre-to-the-home (FTTH) players in South Africa.
This was revealed in the company’s interim results for the six months ended 30 September 2020, which were released on Monday.
As part of its results, Vodacom said it accelerated its fibre roll-out in the six-month period, more than doubling the total number of homes and businesses connected to 95,258.
This number includes Bitstream, where Vodacom acts as an Internet service provider (ISP) to fibre wholesalers.
What it shows is that Vodacom is now one of South Africa’s biggest fibre ISPs, rivalling far more established players.
The company is also growing its fibre network operations. Its owned fibre passed 128,213 homes and businesses as at 30 September 2020.
This growth is not unexpected. Vodacom CEO Shameel Joosub said in 2018 they wanted to become a bigger player in the fibre-to-the-home market.
As part of this plan, Vodacom increased its investment in the fixed-line arena, which includes fibre infrastructure.
Vodacom’s ambitions in the fibre market are, however, much bigger than just being one of the country’s top ISPs.
The operator has been linked to discussion with Remgro to acquire Community Investment Ventures Holdings (CIVH), which owns Vumatel and DFA.
Vodacom has been keen to get its hands on Vumatel, which owns and operates South Africa’s largest fibre-to-the-home network.
The biggest obstacle for a deal between Remgro and Vodacom is CIVH’s eye-watering valuation of R18.5 billion.
Compare that to Telkom’s market cap of R17 billion, and it is easy to see why many stakeholders see CIVH’s valuation as inflated.
Vumatel and DFA’s 29,300km fibre network, which passes 690,000 premises and connects 11,500 mobile base stations and 240,000 premises, is indeed valuable and difficult to replicate.
However, CIVH’s book value is less than half of intrinsic valuation and thanks to mounting losses, its book value has significantly declined over the last year.
Even with Vodacom’s desire to become a dominant player in the fibre market, Remgro’s R18.5-billion valuation for CIVH may be a step too far.
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