DFA boosts interim revenue by 35%
Dark Fibre Africa (DFA), which constructs and owns fibre-optic networks, reported a 35% rise in revenue for the six months ending September 2013, to R409 million.
This rise was underpinned by solid growth of 42% in annuity revenue, with the DFA having secured a healthy annuity income in excess of R50 million per month.
This according to investment holding company, Remgro, which has an effective interest of 43.8% in the CIV group which is active in the telecommunications and information technology sectors.
Taking into account Remgro’s direct interest of 23% in Dark Fibre Africa (DFA), Remgro has an economic interest of 49.7% in the net asset value of the group.
Remgro said that DFA increased the funding package with its consortium of lenders from R2.6 billion to R3.5 billion during the course of the year.
However, it noted that one of the main operating challenges that DFA faces is the slower than anticipated site build/last mile by customers that affects DFA ’s ability to link mobile operator base station sites or enterprise customers to the fibre network.
This, it said, causes a delay in annuity revenue generation to offset increasing depreciation and finance charges incurred on network rollout costs.
Remgro said that most of DFA’s customers extended their initial contract periods of five years to either ten or fifteen years during the reporting period.
DFA owns fibre network rings in Johannesburg, Cape Town, Durban (expanding to Pietermaritzburg), Midrand, Centurion and Pretoria.
During the past year, the network has been expanded to a further 17 smaller metros, including East London, Polokwane, Tlokwe, and Emalahleni, to name a few, most of which are complete.
At 30 September 2013, a total distance of 7,513 km of fibre network has been completed in the major metropolitan areas and on long-haul routes, while Remgro put the current value of DFA’s fibre-optic network at in excess of R4.3 billion.
Long-haul routes include Durban to the Seacom landing station in Mtunzini, where the route was extended through Empangeni to Gauteng.
DFA also completed building a long-haul route to link Cape Town to the West African Cable System (WACS) undersea cable landing station at Yzerfontein. DFA built a route to link the North West Province to Gauteng during the year.
“In 2010 DFA commenced with the fibre-to-tower project linking mobile phone operators’ base stations to the core communication rings, and the project will continue through 2014 and beyond as demand for mobile backhaul increases due to, amongst others, a strong growth in data demand by smartphones and Long Term Evolution technology,” Remgro said.
DFA has 4,953 base transceiver station sites on the network that cover three of the four mobile operators. The group monitors and maintains a total of 5,760 customer circuits.
According to Remgro, the next growth drivers for DFA will be the enterprise market and the public sector.
Remgro noted that DFA has signed commercial lease agreements with 51 customers that have Electronic Communication Network Licences ranging from the largest incumbents, to banks, to small niche operators.
“The revenue model is flexible to adapt to the customers’ needs, and DFA either sells an indefeasible right of use agreement which is a lump sum in advance, or on an annuity basis with multi-year contracts of mostly up to 15 years.
“Presently approximately 69% of total revenue is annuity revenue. The future value of the current annuity contract base is in excess of R8 billion,” it said.
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