Standard Bank will provide the financing for MetroFibre Networx’s R5bn expansion of its fibreoptic data network across SA, the bank said on Tuesday. The move shows growing interest by financiers in exploiting the rising demand for fibre.
MetroFibre, an open-access fibre network operator, says it will use the funds to push the growth of its rollout as it connects more homes and businesses.
In an increasingly connected world, fibre companies provide the connectivity between data centres, network towers and masts to homes and businesses. Companies such as Telkom’s Openserve, Liquid Intelligent Technologies and Dark Fibre Africa have ramped up infrastructure builds in recent years, so it makes sense for MetroFibre to raise funds to compete in this capital-intensive industry.
So vast is the opportunity at the moment that it has spawned two large deals: Vodacom joining forces with Remgro’s CIVH for R13bn and MTN’s recent bid to take over Telkom, estimated to be worth about R30bn.
Launched in 2010, MetroFibre is considered to be one of SA’s top three fibre network operators, with its open-access network passing the 350,000 homes mark in six provinces. It aims to reach an additional 500,000 homes by 2025.
MetroFibre also sells bandwidth and other networking products to internet service providers, resellers, residential and business properties.
As part of the expansion drive, the company is looking to increase its reach in secondary or rural areas in SA, which it calls “underserviced communities”.
“The fast-growing demand for fibre connectivity in many outlying regions presents opportunities for filling this critical gap, not only from a business perspective, but also from a socioeconomic upliftment standpoint,” Standard Bank said.
Nishela Ramgoolam, executive for structured capital at Standard Bank Corporate and Investment Banking, said the deal bolsters its move to back digital infrastructure businesses, “driving positive, sustainable and truly embedded technological growth across the continent, and developing digital innovations that matter”.
Ramgoolam’s comments highlight the growing interest by 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 (IFC) in the form of a $260m (R4.3bn) loan. An affiliate of the World Bank, the IFC specialises in financing private enterprise investment in developing countries through loans and direct investment.
The IFC 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 100,000km of fibre.
MTN has stated it aims for its fibre footprint to reach 135,000km from 100,000km now.
Other digital infrastructure, such as data centres, which are all connected using fibreoptic cable, is also receiving much attention from funders.
In 2021, Teraco — Africa’s largest data centre provider — said it will spend R6bn over the next four years to expand its capacity in Johannesburg, Cape Town and Durban to cope with growing demand for data centre services. At the same time, Dimension Data is spending R1.6bn to build a data centre in Johannesburg, while Liquid bought the Samrand Data Centre, north of Johannesburg from Standard Bank for an undisclosed sum.
Africa Data Centres, one of the continent’s largest storage players and another of Masiyiwa’s companies, aims to spend just under R8bn to expand its facilities over the next two years, much of this in SA.
Correction: July 27 2022
An earlier version of this story said that Patrice Motsepe was an investor in MetroFibre; he is no longer involved as an investor.
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