Dark Fibre for those left in the, erm, dark
Internet fibre businesses have started pushing into low-income areas
Remgro’s fibre businesses have started pushing into low-income areas, which were largely ignored in the first wave of broadband rollouts across SA.
Dark Fibre Africa (DFA), a subsidiary of Johann Rupert’s JSE-listed investment vehicle, was moving into affordable housing projects, targeting units with rents between R4,000 and R11,000, said DFA CEO Thinus Mulder.
The fibre projects are being run by DFA’s SA Digital Villages unit, which installs and operates fibre-to-the-home connections.“It’s early days but we don’t really see a significant difference in uptake between the different LSM levels,” Mulder said. This was because lower-income areas tended to have younger populations, “and that balances” demand between income segments.
Meanwhile, Vumatel, which is Remgro’s latest fibre investment, is also starting to target low-income areas. Vumatel plans to build a fibre network in Johannesburg’s Alexandra township, and has said in the past it could offer uncapped broadband services there for as little as R89 a month.
Vumatel has said it would be able to introduce affordable services in Alexandra by using a low-capital expenditure model. It planned to have multiple homes connected to the same pole, while it would also save costs by using overhead lines rather than digging trenches.
Remgro bought 35% of Vumatel in June via its Community Investment Ventures Holdings business, which also holds DFA. The group also agreed to take full ownership in the future. Mulder told Business Day last week DFA was running “a few big projects on the affordable housing side”.
“It’s early days, so we don’t really know what the uptake will be like, but it could be significant in terms of volumes.”DFA’s SA Digital Villages business was working on these projects through partnerships with housing developers.
“They obviously get a breakdown of a person’s income when they do the credit vetting for the lease contracts, so we know what they spend on telecommunication, and it could be a very cost-effective solution for the consumer.”
DFA had rolled out connections so far to about 1,000 units in a new development in Gauteng, though the residents had not yet moved in. Affordable fibre projects could “make sense”.
“You can make it affordable if you’re involved with the developer in greenfield developments. When they’re putting in electricity and sewage systems and things like that, you can put your [fibre] in there and your capital expenditure will reduce significantly.
“It means you can offer a better solution and still make an IRR [internal rate of return] that’s acceptable.”DFA has a fibre footprint, including SA Digital Villages, of about 13,000km.
Most of that network targets the wholesale market – such as connecting base stations for mobile operators and providing fibre-to-the-business connections. The business segment “is growing fast at the moment”, Mulder said.
Meanwhile, also last week, DFA’s Internet of things (IoT) unit, SqwidNet, announced a partnership with Altron subsidiary Netstar.
The agreement would help Netstar move beyond traditional vehicle tracking into new segments of the IoT market.