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Vox gets funding boost from Investec in fibre push

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Vox CEO Jacques du Toit.
Vox CEO Jacques du Toit.

Investment and wealth management firm Investec is supporting end-to-end integrated ICT and infrastructure provider Vox in its efforts to roll out fibre.

In a statement, Vox says the growing desire for fast broadband connectivity, a need enhanced by the massive increase in remote workers over the past year, requires a reliable, affordable and scalable state-of-the-art communications infrastructure network.

It notes that fibre-optic networks have time and again proven to be the best option for this, although installing these networks can be both time-consuming and costly.

In light of the considerable investments required to expand SA’s existing fibre infrastructure, Investec, as mandated lead arranger, has provided Vox with access to debt facilities to fund its fibre rollout plans.

The new development comes after Vox shareholders, including RMB, in 2019, agreed to buy out fellow investor Investec as part of a R2 billion recapitalisation of the South African fibre-network operator.

Investec was part of a group that bought Vox for R452 million in 2011.

Frogfoot revolution

Jacques du Toit, CEO of Vox, says: “The rollout of fibre via our subsidiary Frogfoot is key to helping revolutionise the lives of local families and businesses, by providing a fast, affordable and reliable platform for communication.

“However, the fibre telecommunications game is a competitive one and the right funding partner for growth is paramount. In fact, as work from home becomes the norm, so has the need for fast, affordable and reliable internet connectivity. This additional capex allows us to continue to provide communities with fast and reliable fibre to both homes and businesses as demand continues to grow.”

According to Vox, Frogfoot has doubled the size of its network, significantly expanding its footprint to smaller towns across the country – enabled by a focus on the provisioning of high-speed national long-distance services.

It adds the company is driven by its commitment to an open access wholesale network and has grown its Internet service provider (ISP) network by 30%.

This includes working with local ISPs in towns to enable users to get access to high-speed connectivity. The company has been performing almost 4 000 installations per month, despite challenging pandemic conditions.

Laverne Chetty, Investec specialised finance consultant, indicates that when fibre-to-the-home (FTTH) was launched, higher LSM areas with high housing density in metropolitan areas were the ones naturally targeted first.

“We are now at the point where fast-growing companies such as Vox and Frogfoot are expanding beyond these areas, into new outlying regions where both homes and businesses still need fibre. With the additional funding we have provided, Vox has the capability to implement the next stage of its growth strategy, which includes taking fibre to those areas eager to benefit from high-speed Internet access.”

Chetty adds that Investec was the mandated lead arranger on the Vox deal that structured the debt package, managed the entire process and brought in Rand Merchant Bank and Standard Bank as fellow lenders.

“Our extensive work with Vox over many years has allowed us to better understand their rapidly-evolving business, the telecommunications industry and their specific needs. Coupled with our experience and unique approach to lending, this ensured we were able to create a flexible finance structure that together with Vox’s investors Metier Private Equity and RMB Ventures, helps to unlock Vox’s potential. We are pleased to have been able to provide Vox with this kind of specialised growth funding, to support what is a critical market from both a social and economic standpoint.”

Pandemic-driven changes

Metier’s Paul Botha, who is also chairman of the Vox board, confirms: “Fibre-to-the-home is now at a crucial point in its growth cycle in South Africa, where investment in infrastructure is needed to meet the rising demand for high-speed, reliable broadband. It’s important therefore for equity and debt funders to work together to provide the right capital mix to fund this growth.”

“As a private equity investor, we look to back businesses that are able to grow through the cycle, and Vox fits this criterion,” adds Cassim Motala from RMB Ventures.

Vox notes that demand for fibre is expected to continue to increase as pandemic-driven changes like work from home gain even more traction.

In the end, it says the rollout of fibre should not only boost the home market, but also increase business productivity and efficiency, while delivering a connectivity foundation ideal for start-ups and new businesses.

“Beyond this, there are broader economic benefits, including new business and employment opportunities through remote-working, as well as the social benefits that access to improved telecommunication services bring,” Du Toit says.

“These include video-streamed classes and other forms of e-learning that can transform education in the rural areas. The expansion of access through fibre is one of the ways South Africa can bridge the digital divide. The finance provided to us will enable Vox to achieve its growth ambitions, its desire to remain at the forefront of revolutionising connectivity, and its aim of helping to maintain the human connection across the nation.”

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