- CEO indicates wireline infra relationship with CIVH could be extended beyond bounds of South Africa.
- DRC is first market to see pilot of parallel, off-balance-sheet rural wireless scheme.
Vodacom Group has highlighted plans to create off-balance sheet vehicles to pursue wireless and wireline infrastructure expansion in its regional territories, once kick-off initiatives in its home market of South Africa (SA) are up and running.
Speaking during the operator’s H1 FY22–23 update earlier this week, Chief Executive Shameel Joosub said Vodacom was now piloting a special purpose vehicle (SPV) concept in the Democratic Republic of Congo (DRC), focused on rural mobile site rollout.
He also indicated that Vodacom was keen to expand links with SA fibre partner Community Investment Ventures Holdings (CIVH) to other markets within its regional footprint, which beyond DRC includes Ethiopia, Kenya, Lesotho, Mozambique, and Tanzania (as well as, prospectively, Egypt).
100 sites targeted in DRC side-initiative
The former, wireless infra scheme will help Vodacom “reach more under-serviced rural areas across all markets”, said Joosub (via Seeking Alpha), stressing that the SPV will be “ring-fenced” from the Group’s balance sheet. “We have commenced with a proof-of-concept [PoC] in the DRC with 100 new rural sites. The learnings from this PoC will help shape the rollout of infrastructure in deep rural areas across markets”, he added.
Regional CIVH JV being ‘considered’
Regarding fibre, Joosub suggested Vodacom is “considering” adding an international dimension to its relationship with CIVH — which if approved will see Vodacom gain an up-to-40% strategic stake in SA altnets Dark Fibre Africa and Vumatel, and use the vehicle to expand ‘open access’ fibre infrastructure (Vodafonewatch, #211 and passim). The deal remains subject to clearance from SA’s Competition Commission, having received the green light from telecoms regulator ICASA earlier this month.
In his presentation, Joosub said he expects the CIVH transaction to “narrow the digital divide in South Africa by expanding the reach of affordable high-speed connectivity, while also providing a blueprint for shared-cost fibre rollouts across our other markets”.
Answering a subsequent question from Madhvendra Singh of HSBC, the CEO confirmed that “in terms of fibre and these types of things, we are looking at JVs going forward. And we’ll probably partner more with the CIVH Group into Africa in an off-balance sheet JV type of thing that we are considering”.
Still searching
Vodacom has for some time been on the lookout for strategic partners to share the cost of fibre and wireless expansion in Africa, and progress Vodacom Vision 2025, a medium-term strategy it unveiled in 2021.
Earlier this year, it indicated it was planning to “explore funding options for fibre across our international markets” during the current FY, and had “global technology companies and developmental finance institutions” in its sights.
On the wireless side, Chief Technology Officer Dejan Kastelic flagged in late-2021 that the operator was seeking a partner to share costs of rolling out more than 6,000 new sites in remote areas across Africa, and the operator has indicated this plan could also involve a tech giant tie-up (Vodafonewatch, #201). Mirroring the SA-first nature of the fibre expansion scheme, Vodacom is currently involved in an ongoing project to set up a TowerCo in SA (Vodafonewatch, #196 and #199).
Beyond wireless and wireline, too, Vodacom has mooted plans for a rework of its data centre estate. It recently suggested it was aiming to “develop a group-wide data centre strategy” by March 2023 (Vodafonewatch, #196).
