CIVH earnings up tenfold as Vumatel thrives

Community Investment Ventures Holdings (CIVH) has shaken off previous years’ losses with interim earnings soaring tenfold as it continues to dominate SA’s fibre-to-the-home (FTTH) market.

Remgro reported that CIVH, its telecom infrastructure unit, accounted for R184m of group headline earnings compared with R23m loss in the prior matching period. CIVH said its Vumatel unit connected more than 2-million homes to the internet with fibre.

CIVH comprises Vumatel, SA’s largest fibre-to-the-home network operator, and Dark Fibre Africa (DFA), specialising in providing open-access networks to ISPs and provides fibre services in and between the country’s towns and cities.

“The increase in earnings is mainly due to improved performances by CIVH’s underlying businesses,” Remgro said. Its performance was driven by network expansion in the past two years. Operating earnings rose to R1.176bn from R696m previously. Vumatel’s revenue rose 14.2% to R1.642bn on fibre infrastructure expansion programme and subscriber growth.

The group says Vumatel is market leader for homes passed and connected in SA, with its market share at 36% and 34%, respectively. “Initially we started off with the core FTTH market, which is typically in places like Sandton. There, we’ve passed a million homes. And then in the last two years, we’ve focused on the lower LSM [income] areas. There, we’ve now also passed a million homes. In September, we indicated that we had passed 1.685-million homes. Now I can share that we have passed 2million,” Remgro CFO Neville Williams said at a presentation of the group’s interim results.

Remgro said capital expenditure at CIVH was R2bn in the review period. In it’s third quarter trading update, Telkom reported that its capital expenditure rose 30.4% year on year with a spend to date of R2.644bn, including R1.142bn for the 2022 spectrum auction, which had enabled improved capacity and coverage across our 7,463 base stations.

That the amount spent was across the group’s operations implies that Telkom spends less on its fibre network than CIVH.

Telkom’s Openserve, SA’s largest fibre network operator, recently announced it surpassed 1-million homes passed in the last quarter of 2022. Estimates indicate that about 3-million SA homes are passed by fibre, with 17-million to cover. Homes passed is a fibre-industry measure of how many potential customers a company has access to by virtue of their service being available in an area.

DFA’s revenue from continuing operations rose 10.5% to R1.297bn, due mainly to annuity income rising to R210m, while underlying operating earnings from continuing operations more than doubled to R647m.

“The group is operationally cash generative and continues to reinvest any excess operating cash flow and capital into expanding its operations and network footprint, with a continued principle of limiting overbuild in key markets.”

CIVH CEO Raymond Ndlovu is to step down “to pursue other business interests” on April 1. He will be best remembered for overseeing the creation of one of SA’s largest fibre providers with Vodacom. That deal saw Vumatel and DFA folded into a new holding company, Maziv.

Vodacom has a 30% stake in the new company, worth an estimated R13bn, and the option to raise that to 40%.

The telecom regulator recently approved the transaction, announced in November 2021. Competition authorities approval is still pending.

R184m

share of Remgro earnings CIVH accounted for versus R23m loss previously

14.2%

Vumatel’ s revenue rise on growth in subscribers and fibre infrastructure