Vumatel owner has R25bn to spend on fibre expansion

Maziv, the parent company of fibre infrastructure providers Vumatel and Dark Fibre Africa (DFA), has armed itself with a multibillion-rand loan from a consortium of lenders led by Standard Bank, setting it on course to compete in the capital-intensive industry.

Standard Bank said on Thursday that it was appointed as a joint-mandated lead arranger and bookrunner to refinance and upsize Maziv’s debt package of R25bn, which is the largest syndicated loan yet in the telecoms sector. The facility will be used to fund major fibre expansion projects by Maziv, which is controlled by Johann Rupert’s Remgro.

The amount is the largest disclosed by a local telecoms operator, indicating that the group may outspend competitors in expanding its fibre network.

Vodacom and MTN each spent R10bn a year for a number of years to expand their mobile networks. The parties did not say over what time period the new funds will be spent.

Standard Bank, Africa’s largest bank by assets, said the transaction will enable deeper broadband penetration in underserviced areas, describing the deal as “one of the most significant transactions in the telecoms sector in SA over the past decade”.

“We are pleased to be playing a meaningful role in driving growth on the continent we call home and in this case, notably for consumers in underserviced areas in SA,” said Brian Marshall, head of investment banking at Standard Bank.

Maziv CFO Byron Billett said: “At Maziv we believe in a world where everyone is connected, and this financing will support us in helping build a nation that has access to an abundance of information and knowledge that empowers its people to move forward. We believe it starts with accessible and reliable fibre solutions as connectivity is the key to unlocking SA’s potential.”

Telkom’s Openserve, SA’s largest fibre network operator, recently announced it exceeded 1.158-million homes passed. Estimates indicate that 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 its service being available in an area.

In an increasingly connected world, fibre companies provide the connectivity between data centres, network towers and masts to homes and businesses.

Companies such as Openserve, Liquid Intelligent Technologies and DFA have ramped up infrastructure builds in recent years, hence Maziv is also raising funds to compete in this capital-intensive industry.

For the six months to December 2022, Remgro said capital expenditure at telecoms unit Community Investment Ventures Holdings (CIVH) amounted to R2bn.

This implies about R4bn spend for the full year, which gives an indication of the rate at which the group has been expanding its infrastructure.

CIVH and Vodacom are seeking approval from competition authorities to merge their fibre assets.

The deal involves CIVH fibre units Vumatel and DFA, which were folded into a new holding company, Maziv.

Vodacom plans to take a 30% stake in Maziv, worth an estimated R13bn, with the option of raising that to 40%. The transaction, announced in November 2021, has already received approval from the telecom regulator, the Independent Communications Authority of SA.

With fibre networks being expensive to set up, Standard Bank has decided to back an area of telecoms infrastructure that is attracting much investment. In 2022, Standard Bank backed MetroFibre Networx’s R5bn fibreoptic expansion through a similar arrangement.

Apart from Standard Bank, there is growing interest among funders in capitalising on the growth of fibre in Africa.

Fibre network operator Seacom, one of Africa’s largest undersea cable providers, recently received backing from the International Finance Corporation in the form of a $260m (R4.3bn) loan.

An affiliate of the World Bank, the International Finance Corporation specialises in financing private enterprise investment in developing countries through loans and direct investment.

The International Finance Corporation has also made equity and debt investments in Strive Masiyiwa’s Liquid for a total of about $250m to date. Liquid is one of Africa’s largest operators with more than 110,000km of fibre.

MTN has stated it aims for a fibre footprint of 135,000km, increasing from about 100,000km now. Telkom, SA’s biggest player in the space, is looking to boost its assets beyond its present 170,000km.

Other digital infrastructure, such as data centres, which are all connected using fibreoptic cable, is also receiving much attention from funders.

CIVH said its Vumatel unit has now connected more than 2-million homes to the internet with fibre.

gavazam@busineslive.co.za