Vumatel seeks to raise stake in Herotel to 100%

Vumatel holding company, Community Investment Ventures Holdings (CIVH) wants to increase its share in Herotel from 48% to 100% to help it reach “secondary” cities. Vutamel acquired a 45% stake in Herotel in Febraury 2022.

The Remgro-owned CIVH is pushing to provide cost-effective, high-speed fibre to lower-income communities across South Africa. It believes Herotel’s footprint in secondary cities can help it achieve its goal.

During a Remgro Investor presentation, head of strategic investments Pieter Uys said the company is waiting for regulatory approval from the Competition Commission before increasing its stake.

He explained that Herotel’s network would help Vumatel offer more affordable, high-speed fibre to lower-income communities across South Africa.

Uys said he couldn’t see any barriers to the acquisition’s approval as it is a “good news story”.

“[Herotel has] focused on secondary cities and towns, and they have a presence in more than 500 of those cities and towns,” Uys said.

“They are doing wireless and mostly fibre at the moment. So it’s a perfect fit. If we can add that to this fibre cloud, we can really extend and get this good news story to more rural areas.”

He said Herotel currently has more than 57,000 fibre and 71,000 wireless subscribers across a diverse mix of residential and business users.

The FNO’s fibre build pipeline includes over 440,000 homes in South Africa, and the company has maintained a consistent average revenue per user across its fibre and wireless products.

Remgro added that Vumatel could leverage Herotel’s existing network to bring its products for less affluent households into secondary cities and towns with a light capital expenditure rollout strategy.

It also said the existing network could provide opportunities to expand Dark Fibre Africa’s (DFA) current network. DFA also falls under the umbrella of CIVH.

Vumatel’s strategy to provide uncapped fibre to lower-income communities includes its Vuma Reach and Key networks- each aimed at a different income bracket.

Vuma Reach targets households earning between R5,000 and R30,000 a month, while Vuma Key targets those making less than R5,000 monthly.

Through Vuma Key, the FNO hopes to provide uncapped fibre to such households for less than R100 a month.

The FNO’s original Vuma Core network targets more affluent households that earn over R30,000 per month.

However, Vumatel noticed that it was leaving a large proportion of South African households out of its product offerings, saying that there is a maximum of 2.2 million households it can connect to its Core network.

The company then launched Vuma Reach — a prepaid uncapped fibre internet product — which added 4.8 million homes to its potential market.

“We were one of the first companies in the world to do fibre-to-the-home on a prepaid model,” Vumatel CEO Dietlod Mare said.

The operator announced plans to launch Vuma Key to provide uncapped fibre connectivity for less than R100 a month in June 2022.

Aimed at the sub-R5,000 per month income bracket, it can potentially add a further 9.7 million households to its network.

The FNO is trialling its Vuma Key product in Alexandra, and Uys said the project appears to be going well. Radarr