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Telecoms company Seacom had a tough second half of 2024 due to the financial impact of a major undersea cable repair, according to Remgro’s latest interim financial results.
Remgro owns 30% of Seacom, which offers fibre-optic pairs from Mtunzini in KwaZulu-Natal to a point of presence in Marseille, France. Seacom was the first to compete with undersea infrastructure from Telkom when it launched in 2009.
From July 2024 to December 2024, the company contributed R2 million to Remgro’s headline earnings, 94% less than the R32 million it brought in over the same six months the year before.
Remgro said the decrease in earnings was mainly due to once-off cable repair costs that commenced “just before” the reporting period.
The company is likely referring to an incident in mid-May 2024, in which all subsea Internet capacity between eastern Africa and South Africa went offline due to faults on the Seacom and EASSy cables.
Although many South Africans complained of poor performance using specific online applications including Netflix, the impact was more severe in the eastern African region as South Africa is also connected via several cables along the continent’s west coast.
The cable repair ship Léon Thévenin was dispatched to attend to the break, and by early June 2024, full connectivity was restored.
Seacom also suffered downtime a few months earlier after an anchor from a ship attacked by Houthi militants in the Red Sea damaged its cable as well as those of EIG and AAE1.
That had a financial impact on Seacom’s financial results in the first half of 2024.
Despite the headwinds, Remgro increased the intrinsic value of its share in Seacom from R683 million to R828 million. That puts the company’s valuation at roughly R2.76 billion.
However, Remgro’s share of the company’s book value decreased from R131 million to R118 million.
Remgro said that Seacom’s results reflected a “positive trajectory” with higher revenue in its digital services and digital infrastructure business units and a solid performance, when excluding the impact of the cable repair.
“The business has continued to service demand for enterprise-managed services, including cybersecurity and cloud services, which has resulted in increased revenue for the Seacom Digital Services business unit,” Remgro stated.
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