South African billionaires Stephen Saad and Mike Teke – shareholders in the DNI consortium have paid R1.6 billion ($99 million) for 34.8% of Frogfoot and Vox, a business that lost R256 million and has negative net asset value of R665m.
In a statement, the DNI consortium subscribed for new shares in Frogfoot Networks and Vox Telecom, taking 34.8% between them in a transaction valuing the companies at 14.4 billion rand, or about $893 million at 16.13 rand to the dollar. After roughly 6 billion rand of debt, worth $372 million, the implied equity value is 8.4 billion rand, about $521 million. DNI holds 18.13% directly.
Saad co-founded Aspen Pharmacare with Gus Attridge in 1997 and remains its chief executive. It is now one of the largest pharmaceutical companies in the southern hemisphere. Teke founded Seriti Resources, the coal producer that bought South32’s South African thermal coal assets and supplies a substantial share of Eskom’s fuel and runs Masimong Group Holdings.
Both appear in the DNI shareholder register set out in the annual reports of Sabvest Capital, the Johannesburg-listed investment company that is DNI’s largest outside holder.
The rest of that register runs through South African business. Peter Gain, the Mineworkers Investment Company, RMB Family Office Group Solutions and Dionne Ellerine, of the family behind the Ellerines furniture chain, all hold positions. The Mineworkers Investment Company, the investment arm of the National Union of Mineworkers, bought 25.1% for about 760 million rand, roughly $47 million, in 2020.
DNI Group is not a household name and is not meant to be. It distributes SIM starter packs, airtime and handsets for mobile operators, runs tower leasing and technology platforms, and provides logistics and distribution to telecoms, banking and retail companies. It generates close to 10 billion rand in revenue, about $620 million, employs more than 1,000 people and operates in 29 countries. Sabvest describes it as its largest single investment.
South Africa has roughly 4.5 million fibre-connected homes, and almost all of them are in higher-income suburbs. It took the industry a decade to reach them. More than 80% of the lower-income market has no fibre at all.
Frogfoot is South Africa’s fourth-largest fibre network operator, providing infrastructure to homes, businesses and mobile towers. It was founded 25 years ago and acquired by Vox in 2015. Vox is the consumer and business-facing internet service provider, selling connectivity, voice, cloud and cybersecurity. Hypa is the prepaid fibre brand Vox launched in 2021, aimed at customers who buy data the way they buy airtime.
No shareholder controls Frogfoot or Vox before or after the transaction, and management holds equity directly. RMB, the corporate and investment banking arm of FirstRand, advised and funded the deal.
Ziyaad Manie, DNI’s chief strategy officer, said the funding was structured on a ring-fenced basis so that the underlying cash flows of the investment service its own obligations rather than drawing on the wider group.
Whether the township thesis holds will take years to establish. What the transaction has already done is put 1.6 billion rand behind the proposition that the next four million South African fibre customers live somewhere the industry spent a decade avoiding.
