Community Investment Ventures Holdings (CIVH) and Seacom reported a sharp decline in contributions to interim earnings at Remgro mainly as a result of higher borrowing costs and repairs.
The Stellenbosch-based group said CIVH, its telecom infrastructure unit that now trades as Maziv, accounted for a headline loss of R141m for the six months to end-December 2024, compared to a profit of R6m in the prior comparable period.
The decline was mainly due to increased borrowing costs “due to higher average debt balances and a negative fair value adjustment on an interest rate hedge,” totalling R232m. Remgro’s portion amounted to R132m.
The unit comprises Vumatel, SA’s largest fibre-to-the-home network operator; Dark Fibre Africa (DFA), which specialises in providing open-access networks to ISPs and provides fibre services in and between the country’s towns and cities; as well as SADV, Rise Telecoms and BritelinkMCT.
Remgro owns 57% of CIVH, with the balance held between Harith General Partners (38%) and other investors.
Harith is a $1.2bn infrastructure fund associated with Tshepo Mahloele, chair of Arena Holdings (the owner of Business Day).
Remgro’s other telecom investment, Seacom, also reported a big drop in earnings, though still positive.
The undersea cable provider’s contribution to group headline earnings amounted to R2m, down from R32m in the prior period, which Remgro attributed to to one-off cable repair costs.
Seacom was hit by a number of undersea cable breaks in 2024, the biggest of which involved repairs in the troubled Red Sea after a cut-off in February, as well as near the SA coastal town of Mtunzini in May.
“The results for the period reflected a positive trajectory with higher revenue in both the digital services and digital infrastructure business units and a solid performance after normalising the results for the impact of one-off cable repair costs,” said Remgro, which owns 30% of Seacom.
“The business has continued to service demand for enterprise-managed services including cybersecurity and cloud services, which has resulted in increased revenue for the Seacom digital services business unit.”
CIVH’s revenue for the six months ended to September 30 2024 increased by 7.9% to R3.387bn compared to the prior comparable period. This was down to increased subscribers at Vumatel and higher demand for DFA’s fibre-to-the-business (FTTB) products.
Vumatel’s revenue increased by 11.1% to R2.019bn, while DFA’s income was up 3.5% to R1.388bn.
CIVH’s earnings before interest, tax, depreciation and amortisation (ebitda) from continuing operations increased by 6.5% as the business “deliberately increased security related and maintenance costs to ensure the safety of its workforce and maintenance service provider staff in the field, while maintaining a high standard of network uptime and service levels.”
Remgro is continuing with legal action over its proposed merger with Vodacom’s fibre business. The deal was rejected by the Competition Tribunal in October.
The proposed merger would see Vodacom take a 30% stake in Maziv, together worth an estimated R13bn — with the option of increasing the stake to 40%.
The transaction would dilute Remgro’s indirect interest in DFA and Vumatel, though it would gain an indirect interest in the assets contributed by Vodacom.
The companies have already lodged provisional appeals pending the tribunal publishing its reasons for blocking the deal.
Remgro said it and CIVH “remain committed to the proposed transaction and firmly believe that, should the implementation of the proposed transaction ultimately be permitted by the Competition Appeal Court, it will deliver significant benefits to SA consumers and the broader economy”.
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