Vumatel is now turning a R50 million profit per month – and growing fast

Business Insider SA
  • Vumatel has seen a 25% spike in underlying operating profit, its ultimate parent company said on Thursday; it now makes roughly R50 million per month.
  • Revenues were also up sharply – to more than R1 billion over half a year – though internal reorganisation contributed to that.
  • More than half a billion rand in cash generated by the holding company it shares with Dark Fibre Africa went back into the network over six months.
  • Ultimate parent company Remgro has aggressively raised money to lay down fibre optic cable.
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In its last-reported six months, fibre-to-the-home company Vumatel saw an underlying operating profit of just under R300 million, its ultimate parent company Remgro told investors on Thursday – an average of some R50 million per month.

That is a 25% spike compare to the previous year.

At the same time Vumatel and its sibling Dark Fibre Africa (DFA) continued to pour money into their networks, to the tune of more than half a billion rand over half a year.

That is just from the cash generated by the two companies, under the banner of their shared holding company, Community Investment Ventures Holdings Limited (CIVH), which is now 55.2% owned by Remgro.

Remgro has aggressively sought new capital for CIVH, and put up its own money too, a total of R1.6 billion so far in 2021.

The rapid rollout of CIVH's network of fast internet cables has been partially matched by revenue growth, as demand for fibre connections continued to grow, according to Remgro.

Vumatel reported a 43% year-on-year spike in revenues – to nearly R1.1 billion – but that was in part due to the transfer of some DFA networks to its sibling, which then reported a small decline in revenues. Combining the two company's numbers shows a 14.3% increase in revenue, during some of the darkest days of lockdowns in 2020.

The re-homing of networks between the sibling companies did not hit DFA's profits in the same way it did revenues; between DFA and Vumatel, underlying operating profit was up more than 43%.

On a discounted cash flow basis, Remgro said, it now values CIVH at 2.1% more than it did six months ago.

CIVH has has a different year end to Remgro, so while its parent was reporting up to the end of December 2020, the CIVH numbers are up to September.

But the companies signalled no slowdown in demand, or a lessening of ambition.

"Covid-19 accelerated the requirements for data and in turn assisted in the performance of the FTTH [fibre to the home] business, Remgro told its shareholders.

Vumtel intends to expand both into secondary cities, with high-end connections, and into areas including Mitchells Plain, Vosloorus, and Soweto, with lower-cost options. 

(Compiled by Phillip de Wet)

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