Seeing the light in Dark Fibre Africa
INTERNET SOLUTIONS: COMPANY INTENDS BUILDING A NATIONAL NETWORK
News that Internet Solutions is bidding to take over Remgro’s Dark Fibre Africa has swung the spotlight on to South Africa’s fibre gold rush.
Internet Solutions (IS) is in talks to buy Dark Fibre Africa (DFA) from Remgro, majority owner (51%) of DFA-parent Community Investment Ventures. A Bloomberg report last week suggested the sellers want R10 billion for the fibre network operator.
But why would Internet Solutions (owned by NTT unit Dimension Data) want a metro fibre network?
Gold rush
For a start, in a mobile-first, cloud-first world, high-speed fibre connectivity is gold. And the rush to blanket (and connect) as much of the world with fibre is this century’s goldrush. In South Africa, there are few networks that would rival DFA’s.
Its 9 503km network of mostly metro fibre is outdone by Telkom (147 000km in 2014/15) and Neotel (16 000km, including 8 000km metro, as of 2016). Rivals FibreCo (4 000km, mostly long-haul as of 2016) and Broadband Infraco SOC (14 661km, as of last year) show how competition in the space is intensifying.
Mobile operators, Vodacom and MTN, have decent fibre footprints in some metro areas, but these are undisclosed.
On the face of it, Neotel’s network is impressive, but more than half of it comprises long-haul routes. In metro areas, DFA’s footprint is more extensive.
That said, Neotel’s network (and access to scarce wireless spectrum) was attractive enough for Vodacom to try and purchase it for R6.5 billion in 2014. Regulatory hurdles were cited as the reason the deal did not go through.
DFA is primarily a wholesaler provider to the other networks. And, in many ways, its metro footprint is the final piece in the puzzle Internet Solutions has been quietly assembling.
It is already a co-owner, along with Convergence Partners and Cell C, in FibreCo, which has built a 4 000km (mostly longhaul) network connecting Johannesburg, Bloemfontein, Cape Town, Port Elizabeth, East London and Durban. That gives it a national footprint.
IS is strong in the enterprise space and its unexpected move in December to buy MWEB from Naspers means it now owns one of the country’s largest consumer internet service providers too.
An acquisition of DFA means it would have few rivals, bar Telkom, in terms of scale (and telecoms is, of course, a scale game). In the past two years, DFA increased the size of its network by a fifth and will almost certainly cross the 10 000km mark this calendar year.
In recent years, DFA has expanded into 21 smaller metros, including East London, Polokwane, Tlokwe ('Potch'), Emalahleni, George and Pietermaritzburg.
And it has a good business too. In the six months to September 2016 it reported revenue of R734 million, an increase of nearly 40% on the year prior. It will certainly exceed R1.5 billion for the full year to March 2017.