Vodacom, which recently received regulatory approval in SA for its fibre merger with Remgro’s CIVH, is looking to form similar joint ventures to expand its fibre business in other countries in which it operates.
“We’re looking to take the CIVH deal beyond SA, growing our fibre footprint which is very low, except for Kenya where we’ve got good presence,” group CEO Shameel Joosub told Business Day on Monday.
“We are looking at creating joint ventures across our footprint except for Kenya where we’ll partner with someone else to build the fibre.
“Ideally that partner should be CIVH,” he said after the mobile operator reported interims earnings to September.
This comes as the Independent Communications Authority of SA (Icasa) last week said it had approved a series of applications by CIVH-run Dark Fibre Africa (DFA) to transfer the ownership and control of their individual electronic communications network service (ENCS) licences to Vodacom, effective from December 1.
An ECNS licence allows a company to deploy and operate a physical network.
CIVH recently formed a new infrastructure company as part of its R13bn deal announced in 2021 to merge its Vumatel and DFA units with Vodacom’s fibre assets to create one of the largest SA fibre companies.
Since announcing the deal, the parties have been trying to get regulatory and competition authority approval.
Vodacom is looking to become a major player in a market currently dominated by CIVH and state-affiliated Telkom. Its deal with CIVH has prompted much deal action, with competitor MTN making a bid in July for 100% of Telkom. MTN has since called off the take-over talks following Rain’s proposal to have Telkom buy its business.
Vodacom has also succeeded in getting approvals for another major deal. “We’ve just been informed that Egypt’s financial regulatory authority has approved the transaction. This marks a key milestone in completing the transaction and follows the approval of Egypt’s national telecoms regulatory authorities,” Joosub said.
“With these approvals, we’re confident we can complete the transaction in the near term.”
At the start of the year, shareholders in SA’s largest mobile operator approved a deal to buy a controlling stake in the Egyptian unit of parent Vodafone for $2.73bn (R47.34bn), in a cash and share deal that aims to expand the group’s footprint into North Africa for the first time.
The group’s hope is that Egypt, as well as new operations in Ethiopia — Africa’s second most populous nation — will bolster its efforts to further grow its already powerful M-Pesa financial services platform.
With voice revenue on the decline and data margins continually being squeezed, operators across the sector, such as MTN and Telkom, are all working to make the shift, banking on areas such as mobile money and e-commerce services for growth.
This comes as Vodacom, valued at R221bn on the JSE, reported revenue increased 7.7% year on year to R53.7bn and service revenue rose 7.2% to R41.7bn. Three-quarters of group revenue was generated in SA.
Net profit decreased 9% to R8.07bn in the six-month period. It declared an interim dividend of 340c per share, 19% lower than the previous matching period.
Headline earnings per share (Heps), a widely used measure of profit that strips out impairments and one-off items, dropped 9.5% to 457c, affected by start-up losses in Ethiopia and higher finance costs as interest rates normalised to pre-pandemic levels.
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