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DealMakers - Q1 2019 

Metro Fibre’s game changer

Andrew Balnaves and Sthembiso Tshabalala


The strategic equity investment by Stoa Infra & Energy (“Stoa”) into Metro Fibre Networx (Proprietary) Limited (“Metro Fibre”) comes as no surprise in a sector that is currently experiencing significant growth and requiring large amounts of capital, both debt and equity, to fund and sustain this growth. In March 2019, Metro Fibre completed a landmark strategic equity capital raise – the third equity capital raise since inception in 2010, at a valuation that justified further investment by its existing shareholders. The equity capital raise positions Metro Fibre for continued growth, moving from regional operations to establishing national operations as a diversified telecommunications company. 

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Sthembiso Tshabalala
Andrew Balnaves

In October 2018, the International Telecommunications Union published the findings of its study on “The economic contribution of broadband, digitization and ICT regulation”. The findings of the study include:

  • An increase of 1% in fixed broadband penetration yields an increase of 0.08% in gross domestic product (GDP);

  • An increase of 1% in the digital ecosystem development index results in 0.13% growth in GDP per capita; and

  • Significant correlation (0.6) between efficient and effective ICT regulation and the investment in infrastructure of digital services, connectivity of digital services, household digitization and digital factors of production.


In the South African context, the importance of inward foreign direct investment and investment in the ICT sector coupled with efficient regulation cannot be underestimated. As an investment bank, Standard Bank expects the ICT sector to remain active through capital raisings and consolidation.


Metro Fibre is a high-growth emerging player in South Africa’s Fibre-To-The-Home (FTTH) and Fibre-To-The-Business (FTTB) markets. The company was established in 2010 by telecommunications professionals with a long history of establishing businesses in the sector.


In 2013, Sanlam Life Insurance Limited, through its Sanlam Private Equity division, became a significant shareholder in Metro Fibre, providing the Company with access to capital to execute its then strategy to provide wholesale and retail fibre connectivity for customers in its FTTB segment.


In 2015, Metro Fibre launched its FTTH offering, focusing on the northern suburbs of Johannesburg and Pretoria in Gauteng. The FTTH segment has seen homes passed growth in excess of 216% compound annual growth rate (CAGR) and connected homes growth in excess of 151% CAGR since inception.


In 2017, Metro Fibre’s management and shareholders approved an ambitious R2bn capital expenditure (“capex”) programme which will see the Company develop and expand its core network with a view to address the significant demand experienced in its FTTH and FTTB segments.


Stoa is a joint stock French company owned by Caisse des Dépôts (“CDC”) and Agence Française de Développement (“AFD”) with a capital base of €600m earmarked for investments in equity and quasi-equity in developing and emerging countries in the power, telecommunications and transportation sectors, with a strong focus on Africa.


Established in 2017, Stoa represents the emergence of a new type of infrastructure investor, at least in the African landscape. Stoa’s investment team think, operate and approach its investments in the same way as private equity investors, with the agility to match them.


Speaking about the equity raising process, Metro Fibre’s Deputy Chief Executive, Jan-Jan Bezuidenhout commented, “We were extremely impressed by Stoa’s approach to the transaction. We found Stoa to be pragmatic and agile displaying a deep understanding of Metro Fibre, South Africa as a country and the opportunity that Metro Fibre is pursuing.”


Standard Bank acted as Financial Advisor to Metro Fibre in the equity capital raise, adopting a two-phased process with a significant amount of information shared in the early part of the process. This approach allowed the parties to quickly assess the opportunity and reach commercial consensus on value and shareholder alignment. Standard Bank’s deep telecommunications expertise, global network with financial investors, and its advisory capabilities, came together to provide a bespoke solution to Metro Fibre, balancing the requirements of incoming and existing shareholders to attract the right partner that shares the same values as Metro Fibre’s management and shareholders.


Balnaves is the Head of Corporate Finance and Tshabalala Vice

President in Corporate Finance at Standard Bank’s Investment Banking Division.

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