Frogfoot CEO Shane Chorley stated in the TechCentral Show that the company intends to continue acquiring smaller fiber optic network operators in South Africa's affluent suburbs. He also anticipates that larger networks will come up for sale in the coming years, potentially leading to significant consolidation of one or two of them.
The acquisition of small Fiber Optic Network Operators (FNOs) in 'green suburbs' is a key part of Frogfoot's strategy. Chorley noted that they have already completed several such deals and plan to continue implementing them. Most of these deals concern networks serving fewer than 10,000 households.
In August, Frogfoot, internet provider Vox, and the prepaid fiber brand Hypa raised new equity capital and expanded their credit lines as part of a deal that valued these enterprises at 14.4 billion rand. Much of this capital is being directed towards settlements where Frogfoot aims to increase construction rates from approximately 80,000 connections per year to 360,000. Chorley emphasized then that consolidation would not affect the low-income market as long as there was an opportunity to build new facilities.
However, he predicts the trend will continue in the suburbs. As previously reported by TechCentral, Octotel and MetroFibre Networx, which share an investor—African Infrastructure Investment Managers (AIIM)—are exploring a potential merger. Chorley stated that he believes consolidation in the FNO segment in green suburbs will continue, and Frogfoot wants to be involved in it.
When asked whether Frogfoot prefers to buy or be bought, Chorley replied that it would be foolish to ignore any offer, but the main goal is growth. He expressed hope that the company would be the acquirer, not the subject of a sale. In August, he mentioned that Frogfoot aims to create a 'telecom giant' rather than selling itself to MTN or another major buyer.
Acquisition unlikely
Abraham van der Merwe, who leads Frogfoot, Vox, and Hypa, believes that consolidation is inevitable in the infrastructure business because infrastructure requires scale. Nevertheless, he thinks Frogfoot is unlikely to be acquired anytime soon, as the company's mission is organic growth, and its investors, including management, are patient and want to own the business for 'a very long time.'
Van der Merwe added that the group does not plan to follow the example of Herotel, which signed an agreement in July to distribute Amazon Leo satellite broadband access in low Earth orbit in South Africa under the Evry brand starting in 2027. He suggested that participation in this now is unlikely. The group prefers to own its own infrastructure, and its task is to connect densely populated areas of settlements, which 'requires a different type of technology.'
Van der Merwe explained that low Earth orbit services make sense in sparsely populated areas, such as farms or hunting grounds, where fiber optics would never be economically viable. However, he also noted that each satellite covers a large area, so bandwidth decreases as the number of users in that zone increases. He warned that if a terminal were installed in every home in a settlement to use the same satellite, the bandwidth would be very low.
He noted that for Herotel, which was built through the consolidation of fixed wireless operators and still has a large fixed wireless base, investment in Leo is 'absolutely justified.' Nevertheless, he does not see satellites as a 'serious threat to fiber optic networks in dense areas,' pointing out that ground stations transmitting satellite signals also require fiber optics. He drew a similar argument regarding 5G fixed wireless networks, such as the one being built by Comsol, a Frogfoot client. He compared it by saying that if the last 5G station were the size of a golf ball, the fiber optics they deploy in every home would be the size of the sun.