Vumatel revenue soars 43% on subscriber uptake growth

Investment holding company Remgro on Thursday (25 March) reported a big decline in earnings for the six months ended December 2020, citing relentless toil around the Covid-19 pandemic.

Total headline earnings per share declined by 67.1% to 247.4 cents per share, while headline earnings per share from continuing operations fell 52.7% to 247.4 cents per share.

The decrease in headline earnings from continuing operations is mainly due to lower contributions by Mediclinic and FirstRand, as well as lower interest income, due to the 300 basis points reduction in interest rates since January 2020, it said.

Remgro‘s assets include Mediclinic, RMI, CIVH (which owns Vumatel and DFA), FirstRand, RCL Foods, and Distell. The group said that CIVH’s contribution to its headline earnings amounted to a loss of R209 million (2019: a loss of R197 million).

Dark Fibre Africa Proprietary Limited’s (DFA) revenue remained flat at R1 188 million (2019: R1 190 million), however, Vumatel’s revenue increased by 43% to R1 092 million, driven by accumulated subscriber uptake growth and the acquisition of additional networks from a DFA subsidiary, it said.

Vumatel is South Africa’s largest fibre-to-the-home network operator with over 19,000km of fibre assets.

Covid-19 accelerated the requirements for data and in turn assisted in the performance of the FTTH business, Remgro said.

Grindrod and Seacom contributions to Remgro’s headline earnings amounted to R15 million and R35 million (2019: R41 million and R9 million), respectively, while other infrastructure investments include Grindrod Shipping Holdings Limited’s (Grindrod Shipping) contribution, which amounted to a loss of R58 million (2019: a loss of R22million).

The increased loss from Grindrod Shipping is mainly due to a decrease in dry bulk spot rates, which were affected by lower dry bulk demand resulting from the Covid-19 pandemic, the group said.

“The second wave of Covid-19 in the second half of 2020 hit South Africa harder than expected, bringing with it a new variant with higher infection rates and greater severity of symptoms. This led to the imposition of further lockdown measures in order to slow down the spread of the disease and ease pressure on the healthcare system,” Remgro said.

It said that the results for the six months to December 2020 are not directly comparable with the six months to December 2019, which related to a pre-Covid-19 period.

Headline earnings for the period under review was significantly affected by the decreased contribution of Mediclinic (down by 80.2%), which includes the full impact of the Covid-19-related lockdown measures on its results for the six months to September 2020.

Furthermore, due to the accounting reclassification of FirstRand from an equity accounted investment to an investment at fair value through other comprehensive income, no earnings from FirstRand were accounted for in the period under review, whereas R548 million was included in the comparative period.

As a result of the Covid-19 pandemic, FirstRand did not pay any dividends during the period under review, it said.

Excluding Mediclinic and FirstRand, the rest of Remgro said its investment portfolio had a resilient performance during the Covid-19 pandemic with their contribution to Remgro’s headline earnings decreasing by only 7.7%.

For the period under review, total headline earnings decreased by 67% from R4 242 million to R1 398 million.

During June 2020, Remgro unbundled its 28.2% interest in RMB Holdings and, consequently, the investment in RMH was treated as a discontinued operation for the year ended June 2020.

Remgro’s intrinsic net asset value per share increased by 4.9% from R154.47 at 30 June 2020 to R161.98 at 31 December 2020, it said.

The group declared an interim gross dividend of 30 cents (2019: 215 cents) per share, adjusted downwards to take into account the RMH Unbundling and the impact of the Covid-19 pandemic.

A dividend withholding tax of 20% or 6 cents per share will be applicable, resulting in a net dividend of 24 cents per share, it said.

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