Information and communications technology (ICT) group Vodacom Group plans to acquire a strategic stake in Community Investment Ventures Holdings’ (CIVHs') fibre assets under a newly formed InfraCo entity.

The InfraCo will hold all material assets currently owned by CIVH subsidiaries carrier-grade dark fibre provider Dark Fibre Africa (DFA) and fibre network operator Vumatel, as well as certain Vodacom-owned fibre assets.

Vodacom Group will hold a co-controlling 30% equity interest, with option to acquire an additional 10% stake in InfraCo to bring its share to 40%.

“Our agreement with CIVH aligns with Vodacom Group’s strategy to build high quality and resilient fixed and mobile networks with and through selected strategic partnerships across the African continent. It also supports Vodacom’s purpose-driven plan to assist the government in rebuilding the economy post-Covid-19,” said Vodacom Group CEO Shameel Joosub.

The deal, subject to regulatory approvals, is expected to transform Vodacom’s South African fibre business and accelerate the purpose-led group’s ambition of connecting people for a better future.

“The transaction will enhance and scale Vodacom’s fixed offerings across both the consumer and business segments and leverage a shared cost model to accelerate the provision of open-access infrastructure in South Africa,” he explained.

“The South African consumer will benefit from the fresh capital injection and shared cost approach as it will significantly scale-up the fibre reach of the InfraCo’s various fibre brands, including smaller towns. This is expected to have a positive impact on both Vodacom’s and the country’s network quality and resilience, which in turn, will help fast-track South Africa’s connectivity rate.”

CIVH Group CEO Raymond Ndlovu said the milestone investment will boost its ambitious fibre roll-out programme across South Africa and assist in narrowing the digital divide by enabling affordable access to connectivity in some of the most vulnerable parts of our society.

“Ultimately, it will result in much needed inclusive economic growth.”

Vumatel, which builds, owns and operates a high-speed fibre-to-the-home (FTTH) network using a wholesale open-access model that passes more than 1.2-million homes, has deployed over 31 000 km of fibre infrastructure across South Africa.

In terms of the agreement, Vumatel’s fibre network will be merged with Vodacom’s FTTH and fibre-to-the-business (FTTB) assets.

DFA specialises in building, installing, and operating a national metropolitan fibre network, which currently spans 13 000 km and 37 000 connected circuits, supplying a range of dark fibre and actively managed fibre products to enterprise customers.

Vodacom will pay for the transaction through a combination of R6-billion cash and the contribution of its FTTH, FTTB and business-to-business transmission access fibre network infrastructure to the InfraCo, at a valuation of R4.2-billion, in return for new shares in InfraCo.

Vodacom will acquire further secondary shares from CIVH sufficient to increase its shareholding to at least 30% in the InfraCo at a pre-agreed formula.