Broadband market moves

DARK FIBRE: REMGRO ‘LOOKING TO SELL FOR R10BN’

Internet Solutions could become South Africa’s secondbiggest fibre network after Neotel if Remgro deal goes through.

Remgro is in talks to sell broadband provider Dark Fibre Africa to Internet Solutions, the local company owned by Nippon Telegraph and Telephone Corporation of Japan, three sources say.

If finalised, the deal gives Internet Solutions access to and control over a 10 000km fibre-optic cable network, the second-biggest locally after Neotel.

Talking turkey

Remgro, which owns 51.9% of the business, and investment partner New GX Capital, are seeking as much as R10 billion ($723 million) for the asset, said the sources, who asked not to be identified.

The potential buyer is Internet Solutions, a unit of Nippon-owned IT services provider Dimension Data, they said. For Remgro, the cash injection could be used to repay debt and fund future acquisitions, said one of the sources.

Remgro shares rose as much as 1.1% and closed 0.4% higher at R209.50 in Johannesburg on Tuesday. The company is founded by the family of South Africa’s richest man, Johann Rupert, who is also the chairman.

The acquisition of Remgro’s stake would give pan-Africa-focused Internet Solutions access to as much as 10 000km of fibre networks, which will help the telecommunications provider extend broadband access in South African cities including Johannesburg, Cape Town and Durban.

Dark Fibre is South Africa’s second-largest fibre network company after Neotel, which was itself taken over by Econet Wireless Global affiliate Liquid Telecom last year for R6.55 billion.

Neither Remgro nor Dark Fibre could comment on market speculation, spokespeople for both companies said.

Internet Solutions has a “longterm strategic partnership” with Dark Fibre and the company “will continue to explore opportunities” to pursue its business strategy, said Mayur Soni, a spokesman.

For the six months to end of December, Dark Fibre reported earnings before interest, taxes, depreciation and amortisation (Ebitda) of R495 million. Profit by that measure is forecast to top the R1 billion mark for the year, said two of the people.

The deal, which is still being negotiated, values Dark Fibre at as much as 10 times Ebitda, they said. The company also owns a fibre network in Pretoria and has been expanding into more than 20 smaller cities.

Rupert’s net worth is $7.1 billion, according to the Bloomberg Billionaires Index. Remgro’s other investments include stakes in London-listed private health-care provider Mediclinic International Plc and a majority share of Distell Group, Africa’s largest wine and spirits producer. – Bloomberg –