Vumatel to inject R3bn in SA fibre roll-out

2016-04-20 10:20 - Gareth van Zyl, Fin24
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Broadband internet. (Duncan Alfreds, Fin24)

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Johannesburg - Independent fibre provider Vumatel - which has won new financing from Standard Bank - wants to invest R3bn over the next two years in building out its local network.

Vumatel launched its first fibre network in upmarket Johannesburg suburb Parkhurst in 2014, offering an alternative to Telkom’s fixed-line ADSL offering.

Since then, the company has expanded to other Johannesburg areas such as Blairgowrie and Linden.  Vumatel is also building networks in Cape Town and, last year, the company said it’s targeting reaching 100 000 South African homes by 2016.

After winning a financing round from Investec last year, Standard Bank and Vumatel have further reached a “significant finance deal” for an undisclosed amount, according to a statement.

“We need to ensure that we invest in long term sustainable infrastructure that can support the growth in demand for high speed connectivity,” said Niel Schoeman, chief executive officer for Vumatel in a statement.

“That is why we plan to invest R3bn over the next two years in fibre optic networks to service the residential sector.  

“We look forward to our partnership with Standard Bank and Vantage Capital, who provides mezzanine financing,  to create the networks that will contribute to national growth,” said Schoeman.

Subsequently, Standard Bank will become the lead financier of Vumatel.

The bank, in a statement, says the deal was structured through Standard Bank’s business acquisition team, which concentrates on debt focused financing for top-line commercial clients.

“The fact that an agreement with Vumatel was reached a mere 18 months after the launch of the company is a tribute to the entrepreneurial stature of the three principals,” said Andrew Somerville, head of business development for commercial banking at Standard Bank.

“Vumatel has a management team that have a proven entrepreneurial record and it is their outstanding business records that created the impetus for Standard Bank to become involved with the project.

“This is a transaction about creating South Africa as a better and globally competitive country for its citizens,” said Somerville.

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