CIVH in talks with investors to raise R6bn

CIVH, the Remgro-controlled telecommunications infrastructure holding firm that owns each Vumatel and Dark Fibre Africa, is speaking to native and worldwide investors to raise R6 billion in new funding.

Vodacom Group has held talks to purchase a major minority stake in CIVH, although it’s understood a deal with South Africa’s largest cellular operator, though nonetheless probably on the playing cards, is just not imminent. TechCentral understands from a supply who claims to have information of the scenario that the events held unique talks a few deal, however that this exclusivity interval has since lapsed.


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CIVH chairman Pieter Uys — who beforehand led Vodacom Group as CEO earlier than becoming a member of Remgro in 2012, the place he serves as head of strategic investments — advised TechCentral that CIVH’s administration group and its advisors have been engaged on a R6-billion capital raise course of since November final 12 months. (Remgro is CIVH’s largest shareholder, with an efficient 54.7% stake.)

“The process was paused in April this year because of Covid and restarted somewhere in the second half of the year,” Uys mentioned, including that each native and worldwide potential investors have been in discussions with CIVH and its advisors.

Three impartial sources advised TechCentral this week that Vodacom has held detailed talks with CIVH a few potential funding and that the telecoms group stays eager to make investments, notably given Vumatel’s robust presence in the house fibre broadband market and Dark Fibre Africa’s vital fibre footprint. However, the precise stage of these discussions is just not completely clear at this level.

Vuma in demand

One supply mentioned Vodacom was eyeing a 40% stake in CIVH, whereas one other mentioned it was not more than 30%. Though it’s understood the talks are nonetheless happening, there isn’t any assure the events will attain settlement, one supply mentioned. A sticking level could possibly be valuation.

Vodacom is believed to have needed to purchase a stake in Vumatel beforehand, earlier than it was acquired by CIVH. TechCentral reported in May 2018 on hypothesis that was rife in the telecoms trade on the time that Vodacom was poised then to purchase a 49% stake in the corporate. Ultimately, nevertheless, CIVH snapped up the shares and the Remgro-controlled firm took full management of Vumatel.

If Vodacom had been to make a bid for CIVH, the deal might face stiff opposition on the Competition Commission, particularly if it was to take management (which doesn’t seem to be Vodacom’s intention, sources mentioned). It would give Vodacom entry not solely to South Africa’s largest dwelling fibre broadband community but additionally DFA’s community of greater than 10 000km of fibre-optic cable infrastructure throughout South Africa, which is utilised not solely by Vodacom, however by a lot of its rivals, together with MTN.

If a deal to promote a portion of CIVH goes forward, irrespective of who the investor is, it’s going to probably be one of many greatest such offers in South Africa’s ICT trade.

In a September monetary submitting, Remgro attached a R19.3-billion valuation to CIVH. The implied valuation gave the telecoms infrastructure holding firm an intrinsic worth greater than Telkom’s market capitalisation, which was R17-billion on the time of the publication of this text.

Though it reported headline losses in the six months to end-June, primarily on the again of one-off prices, CIVH contributed R608-million in working revenue (earnings earlier than curiosity and tax) to Remgro, up 150.2% from R243-million in the comparable six-month interval in 2019. CIVH’s income contribution was R3.7-billion, up a stable 57.7% from the June 2019 six-month interval.

CIVH acquired management of Vumatel in May 2019, when it purchased the remaining 65.1% of the shares it didn’t already personal. Remgro issued a assure to Rand Merchant Bank for a mortgage facility, which was granted to CIVH to fund the Vumatel acquisition. Remgro’s publicity associated to this as of 30 June 2020 amounted to R3.3-billion.

Vumatel’s income contribution elevated by 80% to R1.5-billion in contrast to the prior 12 months, pushed by robust development in fibre-to-the-home subscribers. However, its outcomes had been additionally negatively impacted by greater depreciation and finance prices pushed by the increasing community.

Caught napping

Vumatel, which was based in 2015 by businessmen Niel Schoeman and Johan Pretorius, has shortly emerged as a major participant in South Africa’s dwelling broadband market.

Telkom, which had dominated the market with slower copper cable connections, was caught napping by the upstart, and was compelled to modernise its community and roll out its own residence fibre infrastructure, one thing it had been reluctant to do till then because it was nonetheless sweating its legacy copper infrastructure by means of DSL know-how.

Remgro mentioned its 54.7% stake in CIVH had an intrinsic worth of R10.6-billion (and a e-book worth of R4.5-billion) on the finish of the reporting interval in June. This was up from an intrinsic worth of R8.4-billion a 12 months in the past.

Other than the Remgro controlling shareholding, CIVH has a various group of investors, together with New GX Capital Holdings, Chlanich, Community Investment Holdings and Consolidated Capital Investments. – © 2020 NewsCentral Media

Duncan McLeod is Editor of TechCentral. 

This article was first printed on TechCentral, here.


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