MetroFibre has secured R2.5 billion debt package from Investec to support its fibre network rollout across South Africa. The debt package complements the recent R1.5 billion equity raise supported by new shareholder AIIM together with current shareholders.
MetroFibre, which launched in 2010, is a high-growth player in South Africa’s Fibre-To-The-Home (“FTTH”) and Fibre-To-The-Business (“FTTB”) markets. Over the last 10 years, MetroFibre has expanded its service offering to both residential and corporate customers in line with its strategic objective of being a diversified operator.
MetroFibre owns and manages its core network which is a globally compliant Carrier Ethernet 2.0 open access network.
The company announced on Tuesday that the financing will be used to extend its world-class fibre connectivity into underserviced homes and businesses.
“There’s a massive demand for fibre connectivity in many outlying regions. Filling that gap makes sense not only from a business perspective, but also from a socioeconomic upliftment standpoint,” says Wayne Edwards, MetroFibre’s Financial Director.
“In a growing and fiercely competitive market, the timely funding arranged by Investec, together with our recent R1.5 billion equity raise, will enable us to take fibre to more individuals and more businesses, giving them the opportunity to participate in the globally connected economy.”
The funding agreement builds on an existing relationship between the two companies that dates back to 2016 when MetroFibre approached Investec for its first-ever round of debt financing. Back then, MetroFibre was still in a nascent phase, but Investec saw its potential.
Together with the funding from their capital raise toward the end of 2020, MetroFibre is now well-poised for another phase of strong growth.
They plan to densify their existing networks and reach an additional 300,000 residential homes across the country over the next three years.
“We believe the fibre market has reached a tipping point. People are spending more time in their houses which has drastically increased the demand for high-bandwidth internet services, both for the purposes of working from home, education and for entertainment. Fibre is going mainstream,” Edwards explains.
The explosion of the fibre to the home (FTTH) trend runs parallel to an insatiable thirst for bandwidth in the corporate space. As businesses migrate towards digital and cloud-based services – a structural shift that has momentum – their need for faster, stable internet is rising. In addition to MetroFibre’s extensive fibre network in the retail market, they also have a reputation for installing high-performance fibre infrastructure for businesses in the financial services sector.
Last year November, MetroFibre announced that African Infrastructure Investment Managers (AIIM) and STOA have respectively acquired a minority equity stake and increased their shareholding in the South African open-access fibre network operator.
AIIM, one of Africa’s largest infrastructure-focused private equity fund managers, has acquired a minority equity stake in MetroFibre Networx, through the newly incorporated Digital Infrastructure Investment Holdings platform.
The operator said the AIIM’s R980 million investment forms part of a R1.5 billion equity funding round to support MetroFibre’s capital expansion plan, which exceeds R3 billion over the coming three years. The investment will further enhance the company’s empowerment positioning.
AIIM is a member of Old Mutual Alternative Investments (OMAI) and has been investing in the African infrastructure sector since 2000, with a track record extending across seven African infrastructure funds.
Existing shareholder STOA, a foreign investment vehicle-based in France, is providing incremental funding as part of the transaction together with new investment by the founders of the South African Housing & Infrastructure Fund (SAHIF), Rali Mampeule and Kameel Keshav.
The transaction sees AIIM, STOA and SAHIF partner with remaining shareholders of MetroFibre, including Sanlam Private Equity and Patrice Motsepe’s African Rainbow Capital.