CIVH earnings jump tenfold as its stretches its dominance in the home to fibre market

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 comparable period.

CIVH said its Vumatel unit had now 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), which specialises 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. The performance of its businesses was driven by network expansion over the past two years, which saw operating earnings rising to R1.176bn from R696m previously, it added. 

Vumatel’s revenue increased 14.2% to R1.642bn, driven by its fibre infrastructure expansion programme and subscriber growth. 

The group says Vumatel is the market leader both for homes passed and connected in SA, with its market share standing at 36% and 34%, respectively.

“Initially we started off with the core FTTH market, which is typically 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 2-million,” Remgro CFO Neville Williams said at a presentation of the group’s interim results. 

Remgro said capital expenditure at CIVH amounted to R2bn in the review period.

In it’s third quarter trading update, Telkom reported that its capital expenditure increased by 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.

Given that amount was spent across the group's operations, it implies that Telkom is spending 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 a total 17-million to cover. Homes passed is a measure used in the fibre industry to denote the number of potential customers a company has access to by virtue of their service being available in an area.

DFA’s revenue from continuing operations increased by 10.5% to R1.297bn, mainly due to annuity income increasing 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,” Remgro said. 

CIVH CEO Raymond Ndlovu is due to step down “to pursue other business interests” with effect from April 1. He will be remembered best 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 has the option of raising that to 40%. 

The transaction, announced in November 2021, recently received approval from the telecom regulator but approval from competition authorities is still pending.

gavazam@businesslive.co.za