Rain is participating actively in communications regulator Icasa’s auction of broadband spectrum and expects its business to be a big beneficiary of the process.
That’s according to shareholder African Rainbow Capital (ARC) Investments, which published its interim results for the six months to 31 December 2021 on Thursday, in which it provided an update on its investment portfolio, including its 20.2% stake in Rain.
Rain has already secured two allocations of 10MHz of the spectrum in the 700MHz band and 10MHz in the 2.6GHz band. It paid R1.15-billion for this combined 20MHz of spectrum in the opt-in round last Tuesday (8 March) and continues to participate actively in the main stage of the auction, which continues this week and which is expected to conclude soon.Rain is on track to exceed its budgeted R1-billion Ebitda for the year ended February 2022
“The spectrum allocated to Rain will significantly enhance the company’s competitiveness,” ARC Investments said. Rain constitutes 24.1% of the ARC Investments fund value (down from 27% at end-June 2021).
“Rain is on track to exceed its budgeted R1-billion Ebitda (earnings before interest, tax, depreciation and amortisation – a measure of operational profitability) for the year ended February 2022,”ARC Investments said.
“This achievement is viewed as exemplary considering that Rain achieved breakeven only in the last 12 months. The company is likely to continue to benefit from developments in its operating environment. Demand for its products remains strong, even as Covid-19 restrictions are relaxed and employees return to the office.”
ARC Investments said the roll-out of 5G coverage by Rain is “progressing well” and it is now offering access in more towns across the country and better coverage in metropolitan areas.
“The Rain valuation for 31 December 2021 has remained largely unchanged. This is due to delays in the spectrum auction and uncertainty regarding the timing, cost and size of additional spectrum being allocated to Rain.”
ARC Investment’s share in the value of the investment in Rain increased from R3.314-billion at 30 June 2021 to R3.372-billion at 31 December 2021, giving Rain a total valuation of R16.7-billion. This is the result of a R56-million additional investment and a fair-value gain of R2-million.