25 Jan The R3 billion fibre funding gap
It is estimated that less than 18% of South Africans currently have access to fibre. The Fibre industry is expected to invest R3 billion per annum over the next three years to meet the growing need as more South Africans work or attend school remotely. Key industry stakeholders now require capital to develop the Fibre Network.
The South African Fibre outlay is expected to be R2.9 billion per annum for the next three years, with Metrofibre and Vumatel both expecting to invest R1 billion per annum, based on their current expansion plans.
The Fibre Network Operator (FNO) is responsible for building and owning the physical infrastructure that is used to deliver fibre to the home or business. FNOs, which include Openserve, Vumatel, MetroFibre, and Frogfoot, will trench and deploy fibre optic cables in the ground. The Internet Service Providers (ISP) such as Supersonic, Afrihost, WebAfrica, VOX then rent this infrastructure from the FNOs. In terms of the physical build and civil works, Primary Contractors provide FNOs with an Off-Balance sheet solution by building Open Access Smart networks. These deployments by Primary Contractors are done on a Build, Operate, Maintain and/or Retain basis. These Principal Contractors require capital to build the Fibre Network and transfer it to the FNO’s once completed.
RMB noted that fibre is arguably the highest-growth industry. It is, however, estimated that only about 12% – 18% of South Africans currently have access to fibre and only an estimated 5% of South Africans have live fibre connections. This can be compared to Mauritius who achieved a fibre penetration rate (people with access to fibre) of 80% and a connection rate (people with live fibre connections) of approximately 55%. This indicates the massive growth opportunity still available in South Africa.
We have positioned ourselves to provide off-balance sheet equity funding to Principal Contractors on a project-by-project bases. The funding will be provided against asset sale agreements, signed between the Principal Contractor and the FNOs.
