Former SAA boss Vuyani Jarana has secured more than R400m in new funding for Ilitha Telecommunications, his telecom venture, and aims to connect half a million low-income homes.
Across the world, and perhaps more starkly in Africa, rural areas tend to have low network coverage levels as telecom operators avoid investing in them because of the expense. Providers would rather invest in towns and cities with big populations that are major consumers of communications services.
This is one of the main reasons for the explosion in adoption of low Earth orbiting satellite services such as Starlink and Eutelsat OneWeb.
On Thursday, Ilitha announced “a significant” investment from Meridiam at the UN International Telecommunication Union (ITU) conference in Geneva, Switzerland.
The ambition is to “expand Ilitha’s fibre network to at least 500,000 low-income homes, affecting more than 2-million South Africans, and unlocking economic opportunity and job creation in these underserved communities”.
Jarana, who serves as Ilitha’s CEO, told Business Day the funding is a mix of debt and equity. Equity amounts to R120m, while debt makes up the bulk of the funding package at R300m.
“It’s a tiered approach, starting initially with equity contributions and shareholder loans. It’s about R420m initially, before we go out and raise debt in the open market. This will cover our rollout in the first year,” he said.
Ilitha’s main investor, Meridiam, specialises in developing, financing and the long-term management of public infrastructure in three sectors: mobility, public services and
low-carbon solutions.
The France-based firm manages assets valued at more than $22bn and more than 125 projects to date.
SA’s government is tackling connectivity in underserved areas from a number of angles, including mandates on operators, at the last radio frequency spectrum auction, to increase coverage in underserved communities.
It has also earmarked R2.4bn to continue the rollout of its rural connectivity initiative, under the SA Connect project. This is according to the National Treasury’s budget for 2024/25.
For his part, Jarana promises the new funds will be focused on rolling out “affordable, high-speed fibre internet to underserved communities across SA, starting in the Eastern Cape”.
The company will offer flexible, pay-as-you-go broadband internet plans for as low as R3 a day or R90 a month using fibre to the home and on-the-go Wi-Fi from hotspots rolled out in the area.
“Access to affordable, high-speed internet is a fundamental human right and an enabler of economic opportunity,” said Jarana.
“Yet many people living in townships and rural areas lack access and remain locked out of opportunity.
“This investment from Meridiam will help bridge that gap by significantly expanding broadband access and opening doors to education, healthcare and economic participation, while directly contributing to job creation and fostering entrepreneurship in the communities that need it most.”
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.