Independent valuation of Remgro’s CIVH revealed

An independent valuation of Remgro’s Community Investment Ventures Holdings Proprietary (CIVH), which owns Vumatel and DFA, puts its value at R12.4 billion.

This is significantly less than Remgro’s valuation. In its latest financial report, the company valued CIVH at R26 billion.

CIVH is Remgro’s key asset in the telecommunications and information technology sectors. It owns Maziv, which houses Vumatel and DFA.

These two companies construct and own fibre-optic networks and are digital infrastructure leaders with over 57,000 kilometres of trenched fibre.

“This infrastructure provides the essential technologies and services needed for connectivity, and South Africa presents significant opportunities for growth,” Remgro said.

“CIVH is comparable to global digital infrastructure players with a distinct business model relative to mobile network operators.”

During Remgro’s Capital Markets Day on Monday, 14 April 2025, the company revealed it values Maziv at an EV / EBITDA of 10.1x, resulting in an Enterprise Value of R51.9 billion.

This valuation raised eyebrows, as it means that CIVH is worth significantly more than Telkom, a far larger company with significantly more assets.

The high valuation is particularly relevant, as Vodacom remains keen to acquire a stake in Maziv, which will necessitate new price negotiations.

Vodacom first entered into an agreement with Remgro in November 2021 to acquire a 30% stake in Maziv through a cash and assets transaction.

However, in August 2023, the Competition Commission recommended that the Competition Tribunal block the deal. In October 2024, the Tribunal did exactly that.

Remgro and Vodacom are appealing this ruling. The Competition Appeal Court is set to hear the case in July 2025.

Uys explained that after March 2023, Remgro and Vodacom revisited the transaction terms and agreed on an escalating fixed valuation starting in April 2023.

They intended to escalate it for six to nine months, by when they expected to have concluded a deal. However, the Competition Tribunal delayed it for much longer.

“It is time to review the transaction again,” Uys said. “We are looking at a new way of doing the valuation, because the way we did it before is irrelevant today.”

The deal would still include R6 billion in cash from Vodacom and its fibre assets, including towers, fibre-to-the-business, and fibre-to-the-home networks.

“Vodacom will then, depending on the valuation, top it up to get to at least 30% of the shareholding of Maziv,” he said.

Using a discounted cash flow (DCF) valuation

MyBroadband requested details from Remgro on how it conducted its valuation, but the company preferred not to disclose this information.

It would not provide the assumptions for its discounted cash flow (DCF) valuation or the companies it benchmarked CIVH against.

The lack of transparency from Remgro regarding its CIVH valuation makes it difficult to assess how it arrived at such a high valuation for this asset.

To get an objective valuation, MyBroadband asked Daily Investor analyst Drikus Greyling to conduct a discounted cash flow (DCF) valuation on CIVH.

For this valuation, he used information shared by Remgro about CIVH, Maziv, Vumatel, and DFA in its financial reports.

Remgro has repeatedly stated that it does not use price multiples for its valuation of CIVH, but rather a sum-of-the-parts DCF valuation.

DCF valuations typically consider three forms of cash flows: dividends, free cash flow to equity (FCFE), and free cash flow to the firm (FCFF).

FCFF includes the free cash flow available to all debt and equity holders within the firm, while FCFE only includes the free cash flow available to equity holders.

They have slight differences in valuation inputs and methodology. However, they should ultimately lead to the same equity valuation of the firm.

DCF valuations work on the premise that cash flows are the only real return investors receive from an investment.

Therefore, DCF valuations predict a company’s future cash flow generation and discount it back to its present value, which is the value of the asset.

CIVH free cash flow to equity

By its nature, DCF valuations depend on many assumptions to be effectively conducted. One core assumption is that the valued business will remain in business indefinitely.

Therefore, the valuer must predict and assume growth rates for the business’s free cash flow for that same period.

Most DCF valuations rely on a multistage approach, in which the cash flows grow at a “supernormal” growth rate during the growth stage.

After the supernormal growth phase, the cash flows transition into a terminal growth rate as the business matures.

These growth assumptions can significantly influence the outcome of a valuation. Remgro has been notoriously secretive about its assumptions regarding CIVH’s valuation.

However, on its recent capital markets day, it provided CIVH’s free cash flow history for the first time, making an independent valuation of CIVH possible.

Based on the free cash flow data of CIVH, which Remgro provided, the analyst could calculate CIVH’s free cash flow to equity.

CIVH has mostly reported negative free cash flow to equity (FCFE). This means the business has not been able to generate any cash flow for shareholders.

CIVH has achieved an average growth in FCFE of 51% since 2019 and reported its first positive FCFE of R29 million in 2025.

An independent DCF valuation of CIVH and Maziv

Greyling assumed a supernormal growth period of 10 years, where CIVH’s free cash flow to equity will grow at 51% per annum.

Furthermore, it was assumed that CIVH could grow its FCFE at 8.5% indefinitely. This assumption gives CIVH a generous terminal growth rate.

CIVH is, therefore, valued using a two-stage DCF valuation model. The model uses a 10-year period of supernormal growth at 51%, followed by 8.5% FCFE growth indefinitely.

To calculate CIVH’s cost of equity, we calculated the cost of equity for Vodacom, MTN and Telkom using the capital asset pricing model (CAPM).

Remgro does not provide information on CIVH’s capital structure, making it difficult to calculate a levered Beta for CIVH from those of Vodacom, MTN, and Telkom.

However, a 2% premium was added to calculate CIVH’s cost of equity to account for its higher risk as a private asset and its debt-heavy capital structure.

CIVH achieved an overall cost of equity of 12.8%, which means raising share capital would cost CIVH 12.8% per annum.

Over the past few years of its reporting, Remgro has applied an average 18% discount on CIVH’s valuation due to the lack of marketability.

Greyling applied the same discount to CIVH’s valuation, producing a final value for CIVH of R12.4 billion.

CIVH valuation sanity check

MyBroadband performed a “sanity check” of the valuation, as suggested by Remgro CEO Jannie Durandt, by comparing it to the price multiples of local telecommunications companies.

Using offshore network providers to compare CIVH would not make sense, as CIVH will not operate in the offshore market.

Similar assets are priced differently in different markets. Remgro itself has been vocal about the difficulty of operating in South Africa.

South African network providers trade at discounts compared to their international counterparts. This is for good reason, including economic and regulatory challenges.

It would be easy to cherry-pick a few international operators which trade at high multiples to increase the valuation. However, this would be disingenuous.

The chart below illustrates the difference in average valuation between telecommunications companies in South Africa and the United States, highlighting the need for country-specific valuations.

CIVH’s underlying companies, Vumatel and DFA, operate in South Africa. Therefore, it is essential to value the business accordingly through a local comparison.

CIVH’s valuation of R12.4 billion gives it an enterprise value-to-EBITDA ratio of 7.2 and a price-to-sales ratio of 1.87.

Comparing these figures to those of JSE-listed telecommunications companies shows that CIVH is still overvalued at R12.4 billion.

However, this valuation is much more aligned with the South African market than Remgro’s valuation.