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Remgro in talks to sell Dark Fibre Africa for R10bn - sources

Apr 11 2017 17:37
Loni Prinsloo and Colin McClelland, Bloomberg News

Johannesburg - Remgro is in talks to sell broadband provider Dark Fibre Africa to a company owned by Nippon Telegraph and Telephone Corp. of Japan, according to three people familiar with the matter.

Remgro, which owns 51.9% of the business, and investment partner New GX Capital are seeking as much as R10bn ($723m) for the asset, said the people, who asked not to be identified as the talks are private. The potential buyer is Internet Solutions, a unit of Nippon-owned I.T. services provider Dimension Data Holdings, they said. For Stellenbosch, South Africa-based Remgro, the cash injection could be used to repay debt and fund future acquisitions, said one of the people.

Remgro shares rose as much as 1.1% and traded 0.5% higher at R209.68 as of 16:12 in Johannesburg. The company is founded by the family of South Africa’s richest man, Johann Rupert, who is also the chairperson.

The acquisition of Remgro’s stake would give pan-Africa focused Internet Solutions access to as much as 10 000 kilometres of fibre networks, which will help the telecommunications provider extend broadband access in South African cities including Johannesburg, Cape Town and Durban. Dark Fibre is South Africa’s second-largest fiber network company behind Neotel, which was itself taken over by Econet Wireless Global affiliate Liquid Telecom last year for R6.55bn.

Profit rising

Neither Remgro nor Dark Fibre can comment on market speculation, spokespeople for both companies said. Internet Solutions has a “long term strategic partnership” with Dark Fibre and the company “will continue to explore opportunities” to pursue its business strategy, Mayur Soni, a spokesperson, said in emailed comments.

For the six months through December, Dark Fibre reported earnings before interest, taxes, depreciation and amortization of R495m, and profit by that measure is forecast to top the R1bn mark for the year, said two of the people. The deal, which is still being negotiated, values Dark Fibre at as much as 10 times Ebidta, said the people. The company also owns a fiber network in Pretoria and has been expanding into more than 20 smaller cities.

Rupert’s net worth is $7.1bn, according to the Bloomberg Billionaires Index. Remgro’s other investments include stakes in London-listed private health-care provider Mediclinic International and a majority share of Distell Group, Africa’s largest wine and spirits producer.

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