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Absa invests in broadband cable firm

17 September 2008

Absa's investment banking division Absa Capital has acquired a 10% stake in Dark Fibre Africa (DFA), a company that installs, leases and sells broadband cables to local telecoms companies, while also providing cable maintenance services to those companies.

In addition to the equity acquisition, Absa Capital and Absa Corporate and Business Bank are to provide some R950-million in loans to DFA.

The acquisition by Absa Capital's Infrastructure Equity Investments (IEI) team follows other recent successful investments into the Gautrain, the Zambian Energy Corporation, the South African Development Community headquarters in Gaborone, Botswana, and in the Pan African Infrastructure Development Fund.

Smaller telecoms players are set to benefit from a ruling earlier this month by the Johannesburg High Court that value-added network service providers (Vans) had the right to invest in their own telecoms infrastructure.

This means that rather than having to rely on established industry players like Telkom or second landline operator Neotel, smaller telecos can instead opt to have independent fibre optic backbones in South Africa's cities - an area in which DFA can capitalise by laying cables.

Absa Capital IEI spokesperson Sollie Nortjé said that Centurion-based Dark Fibre Africa's open access broadband provisioning model capitalised on the lessons learned from telecommunications operators, and their customers in Europe and the USA, relating to the high cost of self-provisioning of broadband networks.

"[The] announcement allows DFA to make full use of its first-mover advantage and understanding of the South African market, providing the company with a real edge over its competitors," said Nortjé.

Technical superiority

Dark Fibre Africa will focus on areas such as the availability and readiness of infrastructure, technical superiority and cost effectiveness.

"Currently DFA is the only optic fibre ducting provider in the country with trenching technology that installs network cables up to three times faster than traditional methods," said Nortjé.

The process substantially reduces interference to vehicle and pedestrian traffic compared to existing techniques, with the only evidence of work having been done, being a narrow tar-like strip on the side of the road.

A substantial portion of DFA's Johannesburg network is already active and accessible for use, and the company has tied up multi-year sale and lease agreements with Vodacom and Broadlink.

"Absa Capital IEI strongly believes that DFA is not only a sound investment, but will make a major contribution to solving the current unreliable broadband provisioning, which has plagued the domestic ICT sector," Nortjé said.

SAinfo reporter