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One of telecommunications operator Rain’s shareholders, Patrice Motsepe’s African Rainbow Capital (ARC), has attached an intrinsic value to the company of R11.7-billion, or almost a third of Telkom’s market capitalisation.

The ARC Fund’s 20% stake in Rain was valued at R2.3-billion — using a discounted cash-flow model — at the end of December 2018, ARC said in interim results for the six months ended 31 December 2018.

The value of the fund’s investment in Rain increased by R186-million in the second six months of the 2018 financial year, it said, implying its total valuation rose by R930-million.

“Overall, the growth prospects for Rain remain optimistic,” ARC told shareholders in a presentation this week. “Revenue growth has been encouraging and significant progress has been made to further improve on network performance and stability.”

It said Rain is deploying a 4G/LTE-Advanced network and is well placed to use its radio frequency spectrum assets to roll out 5G.

“Rain is aiming to become a full-service mobile network operator, focusing on data as a primary offering,” ARC said.

It listed the operator’s major assets as its spectrum licences, including allocations in the 1.8GHZ and 2.6GHz bands. Rain also has spectrum at 3.6GHz, which could be used for 5G.


“Rain intends to build a dedicated national LTE-Advanced network and infrastructure that will eventually facilitate an environment where open access to the Internet becomes a reality in South Africa, with the best possible quality and Internet speed, at affordable rates.”

Rain has about 3 000 LTE sites nationwide from which it serves retail clients. It also has a national roaming agreement with Vodacom.

In October 2018, Rain suspended new sales of fixed-LTE (fixed-line broadband replacement) services due to network congestion. ARC said this segment was a “relatively small component of the overall business”.

Sales of Rain’s mobile connections to end users are “meeting targets”, with its unlimited off-peak data package proving most popular.

“Overall, the growth prospects for Rain remain positive. Revenue growth has been encouraging and significant progress has been made to further improve on network performance and stability. Rain is well positioned to become a major player in the 5G data market in the near future.”  — © 2019 NewsCentral Media

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