Rain shareholder African Rainbow Capital (ARC) Investments has valued the wireless broadband upstart at R22.2-billion, nearly twice Telkom’s current market capitalisation.
Rain, which makes up 27.6% of ARC’s ARC Fund portfolio (it also includes its stake in TymeBank), raised the value it places in its 20.3% stake in the company by R881-million over the past year to R4.5-billion, valuing Rain at R22.2-billion, an increase of 24.2% in just 12 months.
Telkom, which is a much larger business than Rain, had a market value on Thursday morning on the JSE of less than R12-billion.
Rain is expected to achieve Ebitda of more than R2.5-billion for the year ending February 2024
ARC’s decision to increase its valuation of Rain is largely due to the business “progressing beyond the period of significant net-cash outflow as well as the recent acquisition of additional spectrum”.
“Rain launched its 4G mobile voice offering together with its new 5G home product, rainOne, during May 2023. Since launch, there has been strong interest in rainOne and Rain continues to receive positive feedback from new and existing customers,” it said.
It said the business is “tracking well” against budgets, with Rain expected to achieve Ebitda – earnings before interest, tax, depreciation and amortisation, a measure of operating profit – of more than R2.5-billion for the year ending February 2024 (after taking into account IFRS 16 accounting adjustments, “as is industry practice”).
“Rain continues its ambitious roll-out and marketing strategy to cover more towns across the country and will continue densifying coverage in all major metros,” ARC said. – © 2023 NewsCentral Media