Vumatel suitor foresees fibre market consolidation
Vumatel suitor, investment firm Community Investment Ventures Holdings (CIVH), believes there will be consolidation of the fibre market in SA.
In an interview with ITWeb yesterday, Pieter Uys, CIVH's non-executive chairman and former Vodacom CEO, said although there are many players in the market, in future the industry will consolidate.
Last week, CIVH bought 34.9% of Vumatel for an undisclosed amount and entered into an agreement with Vumatel shareholders to acquire the remaining 65.1%, subject to funding and regulatory approvals.
CIVH also owns Dark Fibre Africa (DFA), which operates over 10 000km of optic fibre infrastructure, that it leases to its wholesale customers on an open-access basis.
Uys pointed out that initially when DFA started, it provided services to telco companies and later diversified to make fibre more affordable and started bringing it to businesses.
"We believe that in the end, all homes in South Africa and all businesses must have fibre connectivity. When you have fibre, you have broadband, and when you have broadband, you have high-speed Internet connectivity, and we can achieve so much with that. We believe we can play a role in fulfilling that objective."
In the pursuit of Vumatel, Uys said the next step is now to submit CIVH's proposal to the Competition Commission for it to get 100% control of Vumatel.
"We are busy finalising our funding and after that, we will see what happens in the industry. We do not yet have full control of Vumatel. It's just an investment that we have in the company. For now, while we are finalising everything, there will not be any changes in the Vumatel business, including the management. As far as the operations are concerned, we will not get involved at the moment."
According to Uys, the fibre opportunity is big in SA and there is still room for many players in the country.
"We are still behind in regards to deploying fibre. However, one day, there will be consolidation of the market."
He pointed out that Vumatel was the first non-traditional telco that started putting fibre in the ground and there have also been other companies that stared doing the same thing.
However, he noted, in the long term, scale matters because laying fibre in the ground is very expensive.
"It's easy to start, but if you really want to scale, you need to invest a lot of money. So, there will be consolidation happening in the market in future. At the moment, because the roll-out of fibre has happened so fast, everybody is focusing on getting more and more fibre in the ground."
He added that DFA and Vumatel do not provide services directly to the end customer but make the infrastructure available to any other company or Internet service provider that wants to have access to that fibre to resell it or add services on to it.
DFA and Vumatel will continue operating separately, said Uys.