Vodacom Group has agreed terms to acquire a strategic stake in Community Investment Ventures Holdings’ (CIVH) fibre assets that will transform its South African fibre business and accelerate the purpose-led Group’s ambition of connecting people for a better future.
Subject to regulatory approvals, Vodacom Group will hold a co-controlling 30% equity interest in a newly formed InfraCo entity into which all of the material assets currently owned by Dark Fibre Africa (‘DFA’) and Vumatel will be transferred in addition to certain Vodacom owned fibre assets. Vodacom has an option to acquire an additional 10% stake in InfraCo to 40%.
Vodacom will pay for the transaction through a combination of R6 billion cash and the contribution of its fibre-to-the-home, fibre-to-the-business and Business-to-Business transmission access fibre network infrastructure to the InfraCo, at a valuation of R4.2 billion, in return for new shares in InfraCo. Vodacom will acquire further (secondary) shares from CIVH sufficient to increase its shareholding to at least 30% in the InfraCo at a pre-agreed formula.
The transaction will enhance and scale Vodacom’s fixed offerings across both the consumer and business segments and leverage a shared cost model to accelerate the provision of open-access infrastructure in South Africa.
Ultimately, the South African consumer will benefit from the fresh capital injection and shared cost approach as it will significantly scale-up the fibre reach of the InfraCo’s various fibre brands, including smaller towns. This is expected to have a positive impact on both Vodacom’s and the country’s network quality and resilience, which in turn will help fast track South Africa’s connectivity rate.
Vodacom Group CEO Shameel Joosub says: “Our agreement with CIVH aligns with Vodacom Group’s strategy to build high quality and resilient fixed and mobile networks with and through selected strategic partnerships across the African continent. It also supports Vodacom’s purpose-driven plan to assist the government in rebuilding the economy post-Covid.”
CIVH Group CEO Raymond Ndlovu says: “This milestone investment will boost our ambitious fibre roll-out programme across the country and assist in narrowing the digital divide by enabling affordable access to connectivity in some of the most vulnerable parts of our society. Ultimately, it will result in much needed inclusive economic growth.”
CIVH operates electronic communications infrastructure through its subsidiaries Vumatel and DFA.
Vumatel is South Africa’s leading fibre network operator, which builds, owns and operates a high-speed FTTH network, using a wholesale open-access model that passes more than 1,2 million homes and deployed over 31 000 kilometers of fibre infrastructure across South Africa. In terms of the agreement, Vumatel’s fibre network will be merged with Vodacom’s fibre-to-the-home and fibre-to-the-business assets.
DFA is a leading provider of carrier-grade dark fibre, specialising in building, installing, and operating a national metro fibre network spanning 13,000 km and 37,000 connected circuits and supplying a range of dark fibre and actively managed fibre products to enterprise customers.
Joosub concludes: “This transaction also aligns with the Vodacom Group’s Africa.connected campaign, which seeks to build on our existing efforts to close the digital divide to ensure that everyone on the continent can enjoy the full benefits of a digitalised society as we connect the next 100 million people in Africa. It is also an important milestone that will result in homes and businesses gaining access to fast and cost effective digital services through fixed line and mobile networks.”