Remgro Limited (REM) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen, and welcome to the Remgro Investor Call on Project Lindt. [Operator Instructions] Please note that this call is being recorded. I would now like to turn the conference over to Pieter Uys, Chairman of CIVH. Please go ahead, sir.

Good morning, everyone. Also great to have Lwanda here with me in the Board room. And this morning, I'm going to speak with a dual voice, firstly, the detail as CIVH, but also here speaking as Remgro, and Carel Vosloo is also with me in the room. So I've got a slide just that summarizes what we're going to cover today. Firstly, just a regulatory update, then a summary of what was in the SENS on Friday, the transaction terms with the updated terms. Then I'm going to do some scenarios to steps, cash flows and the structure that could result from this. It's not all 100% certain because there are various scenarios. For example, Herotel is still subject to regulatory approval. And then right at the end, I have a slide on how you could get to a valuation multiple if you so wish. So the first slide is then the regulatory update. If I take you back in time to even before what's on the left on the slide, we submitted to the competition authorities in December 2021. So we're almost 4 years later now. Then in August '23, the Competition Commission recommended to the tribunal with a prohibition recommendation. The tribunal did the preparatory work and had the hearings during May to July in 2024. And in October last year, they then recommended it for -- with a prohibition as well. We then notified the appeals court that we had an intention to appeal, and we confirmed that this year after we also had sight of the tribunal reasons. The reasons were also made public by the tribunal on the 21st of June this year. Then we -- throughout the year, we continued to engage with the commission to see how do we get closer to each other. So I've got a slide also on that to show where it has changed and why they are now more happy with approving the transaction and not opposing it anymore. So tomorrow, 22nd of July, we actually go into the Competition Appeal Court because even though we are in a position where the commission no longer opposes us, we still have to go into the appeals court. Appeal court will review what the decision was by the tribunal. So we're also a little bit in uncharted territory here because we now have an agreement that we've come up with the commission, but the appeals court will, tomorrow, consider and review the tribunal decision. Originally, there were 3 dates set aside, and it's still penciled in as 3 days. We'll see how it develops tomorrow at the court. I'll be going up to Johannesburg. The court is in Sandton. Then we've just penciled in, so they take 2 months to make a decision. So we've set the long stop date on the 30th of September. If things are then approved, we've extended the long stop date till November 30 to just make sure we implement the steps necessary to conclude the transaction. So the next slide is just an extract from the media statement that the commission put out. And they address 3 of the primary concerns that they had at the time that they prohibited the transaction. The first big concern they had was if Vodacom invests in a fiber business that it's going to stop investing in mobile technology, specifically FWA or fixed wireless access. And they also considered that we could stop investing in fiber. So we have made improved commitments that we will continue to invest in Maziv. We've given a commitment that we will build an additional 1 million homes, specifically in lower LSM areas. We've also attached CapEx commitments to it, and Vodacom has done the same. So they are now more than happy that we will both, Vodacom and Maziv, continue to invest in our respective technologies. And they had a concern about the horizontal overlap. To me, this wasn't a big thing, but it is important to address it, and we've come up to an agreement. Out of the homes that we're buying from Vodacom, which is 160,000, there are fewer than 10,000 -- if remember correctly, it could be 9,000 or between 6,000 and 9,000 homes where they are in a similar area to where we are already. So the Competition Commission feels that we should see if we can get another competitor to take over the overlapped fiber so we don't take competition out of the market. So just, say, 10,000 out of the 160,000 homes that we are acquiring from Vodacom. Then the last one, vertical foreclosure. They were very concerned that with Vodacom at the Board, they could get preferential treatment, preferential tariffs, products. And we just made commitments that, that will not happen. So there are very strict guidelines how Vodacom -- what access Vodacom has to business plans and tariffs and products. But what we came up with in the new set of conditions, the commission is happy that the vertical foreclosure concerns are adequately addressed. I can just add, when I say they were happy with all of these, wherever there were residual risks that they still had concerns, we supplemented those with public interest commitments that we've improved. And then the balance between the public interest commitments and the additional commitments that we've made in the competition were -- made them comfortable. So this again is extracted from the Competition Commission media statement. And we -- I've already mentioned the 1 million homes. We've upped our CapEx commitment between 5 and 6 years to spend between ZAR 10 billion and ZAR 12 billion, building fiber and continuing to invest in Maziv. Vodacom also made similar commitments. We are also adding a commitment that we will not just connect schools. We'll also connect public libraries and clinics if they passed within a couple of meters from our infrastructure. Vodacom is committed to connect more police stations. And then there is other public interest commitments that we've improved that we've already previously made, such as employee share scheme, enterprise development. But I'm going to move on and get to the rest of the transaction. Herotel is a big part. Vumatel, which is currently 100% subsidiary of Maziv, already acquired 49.96% of Herotel a few years ago. And when Vodacom invests in Maziv, they are also investing in the 49,96% of Herotel. And we've come to an agreement how much they are paying for that piece. But the rest is currently held by a company called Herotel Communities (RF). They hold 49,93%. That is currently in front of the tribunal. The commission has recommended it to the tribunal for approval. We haven't got a date, and I'm sure the tribunal is also waiting to see what happens tomorrow at the appeals court. But once that is approved, I will go into the detail just now, but CIVH can then -- has the option then to immediately buy the shares from Herotel Communities (RF) and will then sell that to Maziv to be added to the rest. That then takes Vumatel's interest in Herotel to 99%. There are 3 or 4 minority shareholders that are also still there. And there's always also ICASA. They wait right till the end, but they have indicated that they have no issue with the transaction, both at the Maziv, Vodacom level, but also at the Herotel level, but they will give their final conditions once they see whatever comes out of the regulatory. [ It's what we're hearing ]. Now for the transaction terms, this is just a recap of what's on the SENS, and the Maziv valuation is made up of 2 pieces: the ZAR 34 billion without Herotel and then ZAR 2 billion for the 49.96% Vumatel interest in Herotel, which gives you the headline number ZAR 36 billion that we've referenced. We've also slightly changed, after we've looked at it again, the Vodacom assets that we're buying. Originally, it was ZAR 5 billion. We've reduced that to ZAR 4.89 billion. But the cash has been increased from ZAR 6 billion to ZAR 6.11 billion that they will be investing into Maziv. We've also agreed with Vodacom now that we -- that Maziv can declare a pre-implementation dividend on the day that the transaction happens of up to ZAR 4.2 billion. That number has not been decided. And in the scenarios, I'll show some calculations if we assume the full ZAR 4.2 billion pre-implementation dividend. Then once CIVH received regulatory approval for the acquisition of the 49.93% Herotel shares currently held by Herotel Communities (RF), CIVH will acquire that and immediately dispose of that to Maziv. And that has also now been pre-agreed with Vodacom that it will definitely happen if it's approved. And there's a floor valuation for that piece of ZAR 2.75 billion. But we're also going to do a fair market valuation, so whichever is the highest will be the price they pay for that piece when it comes into Maziv. And I'll also explain a little bit how that will happen. Vodacom then also has an option to acquire no longer 10% more in Maziv, but they can now only go up to 34.95%. And that's also a change that we've made now through the engagement with the Competition Commission, and we're committed to it. But Vodacom and everybody else is also satisfied that that's a good outcome. The Vodacom option. So previously, Vodacom had the option to acquire 10% from CIVH and take up their shareholding to 40%. The 40% was a cap that ICASA put on their maximum shareholding ever in the organization, so that has not changed. And you will see from this that only Remgro will effectively dilute its shareholding in CIVH in favor of Vodacom increasing its stake to up to 34.95%. So we, as Remgro, feel that this -- that it is a good decision to allow Vodacom this option. Not all the shareholders in CIVH see the same value through long-term investments. We feel that having or just part of Vodacom is beneficial to the business going forward. Some of the other shareholders feel that there's a lot more value out of the business. We also believe so. But for us, it is more important to have Vodacom in the organization, and the benefits coming from that has outweighed the decision there. So it's Remgro only option, and it will happen through Vodacom getting additional shares, taking them up to potentially 34.95%. But then the commitment that we've made to the CIVH minorities is that Remgro will sell down through a buyback its CIVH shares so that we leave the minorities in exactly the same position as far as shareholding goes and on a see-through basis in Maziv. So you will see from a later slide that the Remgro shareholding will reduce from the current 57% to 53,7%, while the other CIVH minority shareholding will increase to leave their see-through indirect stake in Maziv the same as what it is today when Vodacom exercises this option. So I'm going to now move into some of the scenarios, steps, the cash flows and also what the structure will look like. The first one, let's assume, for the purposes of my examples, the full pre-implementation dividend of ZAR 4.2 billion at the bottom that will be decided, and it's dependent on final negotiations with the banks, the debt numbers. And -- but for this slide, I've assumed the full ZAR 4.2 billion. So we start with the ZAR 36 billion on the left, point one, ZAR 4.2 billion pre-im dividend, the equity value down to ZAR 31.8 billion. Vodacom then invests the cash, ZAR 6.11 billion, plus the assets, ZAR 4.89 billion, giving you the ZAR 11 billion, increasing the equity value to the ZAR 42.8 billion. Then I've assumed that Herotel second tranche will be approved, and they will -- that would increase the equity value by at least ZAR 2.75 billion. What we have agreed is that, that is the minimum valuation attributed to that second piece of Herotel. But again, a fair market value will be done independently, and whichever is the highest will become the value for that second piece. But for this, I've assumed the floor, taking up the equity value to ZAR 45.550 billion. Then what will happen higher up at CIVH. So firstly, again, assuming the full ZAR 4.2 billion pre-implementation dividend, Maziv will then declare that on the day of the transaction in the form of the pre-implementation dividend. So it's only going to CIVH, not to Vodacom. And Vodacom then does not end up with 30% shares. They're in the mid-20s. So they need to increase their shareholding to 30% because that's where they want to be and where they get the additional shareholder rights that they have asked for and that we've agreed and committed to with the Competition Commission. So they'll buy additional shares from CIVH effectively for an additional ZAR 1.8 billion, taking their shareholding to 30%. Then when the -- and I've assumed that this happens thereafter, it could also happen before they invest, but we have catered for that in the agreement. When Herotel gets approved by the tribunal, I've assumed a minimum valuation of ZAR 2.75 billion. As I said, it could be higher. And Vodacom's 30% part of that of the ZAR 2.75 billion is then the ZAR 825 million that you see on the slide. Because Maziv is buying it from CIVH, that money will flow up to CIVH. CIVH will then partially repay some of the debt sitting at the top. There's a preference share there. You see it at the bottom, it starts ZAR 3.5 billion middle of the year, pay down the ZAR 800 million, leading bottom right, ZAR 2.7 billion of that. There are some taxes and other expenses, and we're also keeping some firepower at the center, just in case we want to other -- continue to explore other opportunities, such as we've previously mentioned, internationally into the rest of Africa, previously mentioned Tanzania, so that could still be an option. But that ZAR 700 million is for taxes and other opportunities. Then there's an estimated dividend from CIVH to Remgro, New GX and CIH. And again, I've assumed a full ZAR 4.2 billion pre-implementation dividend, but I haven't taken the ZAR 825 million for the second piece of Herotel into account. ZAR 4.5 billion will most probably then be distributed to CIVH shareholders, but it could increase by another ZAR 825 million if that transaction gets approved. So this slide shows what it looks like after the first 30% Vodacom investment. You see Vodacom comes in there directly into Maziv, the balance held by CIVH, 70%. And its shareholding above CIVH unchanged: Remgro, 37%; New GX, 37.5%; and CIH, 5.5%. Herotel Communities (RF) still holding 49.93% at this stage. As on the slide, with Vumatel holding the 49.96%, the missing percent, as I mentioned, is held by 3 or 4 minority shareholders. Now the Herotel transaction gets approved and Vumatel through CIVH acquires the rest and takes up its shareholding to 99.9%. And through this, Vodacom will then pay its part of that, which is at least ZAR 825 million, to CIVH. The next slide just shows an example of the Vodacom option. I've assumed that the second Herotel transaction has been approved. This Vodacom option is alive till the end of March next year. Again, we've agreed a minimum floor valuation. But again, an independent market valuation will also be done. So it will be the higher of the market valuation or the minimum floor valuation that we've agreed, and Vodacom will then through this pre-agreed transaction where we sell down in CIVH, keeping other shareholders indirect shareholding intact and Vodacom increasing its Maziv shareholding to up to 34.9% (sic) [ 34.95% ] in Maziv then. So on the slide, making all those assumptions, the CIVH shareholding will reduce to 65.05%, and Vodacom increases to 34.95%, and the Remgro shareholding at CIVH will effectively then reduce from 57% to 53.74%. And our see-through interest in Maziv will then equalize that of Vodacom's 34.95%, where the other minority shareholders' see-through indirect shareholding in Maziv will stay the same. This is then what it will look like after the Vodacom option -- if they exercise the option, what it will look like. At the top, you'll see Remgro reduces from 57% to 53.7%, taking our indirect interest down to 34.95%, New GX increasing to 40.3% and Community Investment Holdings, CIH, going up to 6%, keeping their indirect see-through interest in Maziv the same. Last slide, valuation parameters in making some assumptions. On this one, I've assumed no pre-implementation dividend. After the Herotel transaction, I've assumed that ZAR 2.05 billion for the second Herotel stake. In other words, I've assumed 99% Herotel value in the business, which is made up of the original ZAR 2 billion plus ZAR 2.75 billion, in other words, ZAR 4.75 billion attributable to the Herotel stake within Maziv and Vumatel. So on this slide, what you see for Maziv includes then a 99% of Herotel's equity, plus its debt, plus its EBITDA, and if I do the calc based on these assumptions, I get to a multiple of 11.49x. This then concludes my slides, and now we can go into Q&A if there are questions.

[Operator Instructions] I will now hand over to management for questions from the webcast.

Thank you. And we have more congratulatory messages on the webcast for being steadfast in concluding the deal, Pieter. The 2 questions we have, I think you've covered quite a bit of it in terms of the flow of cash through to Remgro. There was a question around that as to what's -- is it the share of the dividend as well as the share of Vodacom's top-up as well as the option when they purchase a further 4.9% (sic) [ 4.95% ]. So there was just a question around clarifying that, so I mean what of that will be used for debt reduction at Maziv. And that's covered. Pieter, I don't know if there's anything you want to add to that, but we did cover it in...

Maybe I can expand a little bit. So when we're going to make the decision about pre-implementation dividend, we are firstly going to consider the debt situation at Maziv. So we have some covenants there -- covenants currently. Thus, we cannot pay dividends. The debt-to-EBITDA is about 3.5. We've always said that we want to get the debt-to-EBITDA to below 3. So that is our target. We will declare a pre-implementation dividend after we've made sure that the debt/EBITDA is below 3x. What we'll also make sure is that we have enough reserve in Maziv for us to fulfill all our obligations that we are committing to the competition tribunal. What is also important is we have a debt facility that can go up to ZAR 25 billion, subject to EBITDA. And with the Vodacom assets that we are acquiring, even though we're not buying the business, we are buying or getting the assets, it comes with revenue on those assets. That EBITDA that is associated with the Vodacom assets can also assist us in unlocking further funding. So we've taken all of that into account, and we'll take all of that into account when we calculate a final pre-implementation dividend. I also just remember that the last slide and in most of the slides, when I speak to numbers and valuations, I've used numbers, EBITDA and debt up till the end of March '25. So these are all historic numbers that I've used, to clarify.

I think, Pieter, maybe it might be worth going back to that slide with the cash because there's a few more questions on this. Maybe it wasn't clear enough, but the question is around -- obviously, the understanding for a while was that part of the issue was high gearing levels at Maziv. So explain the rationale for the pre-implementation dividend and whether our views have changed on gearing levels or not. And also just what the total cash flow would be that goes to Remgro, assuming the full ZAR 4.2 billion of the pre-implementation. So maybe we should just go through it again because it...

This is the slide you're referring to? So I've already started answering some of it. We will make sure that debt is below 3x, which we believe is a comfortable level for a company like this. And also, with the additional EBITDA that comes in, there's enough headroom that we can continue to build the million homes that we are committing and continue to expand the business. So if you assume that full pre-implementation dividend on this slide, not taking into account the second part of Herotel, there will be a ZAR 4.5 billion dividend declared to CIVH shareholders, which is Remgro, New GX and CIH. And we will get 57% of the ZAR 4.5 billion. Carel, what is it?

ZAR 2.5 billion.

And then if we then assume the second piece of Herotel is another 57%, that could come out of the Herotel. And then if you take the option into account, there could be another, say, ZAR 2 billion coming to Remgro, and there will be some tax leakage in between because we are committing that we will leave the other shareholders if the option didn't happen.

Just a question on the option, Pieter. So can you provide some color as to why that was reduced to 10%?

From 10% to 40%.

From 10%, excuse me.

Yes. So this was, again, through negotiations. Vodacom is still keen to get to 40%. But with our other CIVH shareholders also not wanting to dilute too much and the Competition Commission always having a concern that Vodacom investment at 40% might just be too big and have too big an influence, we, in the end, between the Remgro, CIVH shareholders, the Competition Commission and Vodacom, agreed that 34.95% is still in the best interest of everybody. As I said, Remgro is more than willing to facilitate because Vodacom is actually quite keen to get to 34.95%, and not just that they see value in the business, and they would like to, if I can speak on their behalf. And that's why we've added to the transaction that the option will continue to survive.

And just on the regulatory approvals, Pieter, does the -- so the concerns that were raised by the tribunal, are those addressed? And do they automatically fall away with the agreement with the commission? Or are there still some outstanding concerns that would...

It is. I'm not a lawyer, but tomorrow at the appeals court, I suppose the first thing is the appeals court will want to hear from the commission why they are now satisfied at the additional commitments that we've made. So there are the commitments that were made at the tribunal. So firstly, there were commitments that we made pre the tribunal to the commission. They were not happy with it. And we made additional commitments at the tribunal for the consideration of the tribunal. And now we have enhanced that even further by adding to it. So this is the third set of commitments that we are making. Now the appeals court will listen to the commission. It will then review what tribunal considered, so everything that's in the record. We will also tell our story. And as I said, I don't know how they will come up with a final solution or recommendation. But if they have to ask the commission again, the commission are no longer opposing the transaction if the appeals court then sanctions the second round of -- a third round of conditions. We are happy with the conditions. It is something that we can live with. Vodacom is happy. I think it's a win-win for everybody, for South Africa, for the shareholders, for the company, Vodacom.

And just on the conditions and potential opposition, there were some reports over the weekend that some of the smaller ISPs remain unhappy with the deal. Is this something that's big enough that you're worried about? Or are there any further concessions to be made?

Yes, so the appeals court reviews what was raised at the tribunal. So the work that was done at the tribunal and all the records also reflecting their concerns is in the record. And it is too late for any new concerns to come forward. As I said, the appeal looks at what happened previously at the tribunal. So I'm not aware that it's possible for a new hand to be put up now with new concerns. So technically tomorrow, it goes into the appeal unopposed by anybody.

Again, just back to the dividend. Pieter, just for the sake of clarity, is the -- regarding the ZAR 4 billion, is the ZAR 4 billion Remgro's portion of the dividend? Or does Remgro get 57% of this? And just on a pro forma basis after the transaction, what would the stake be worth -- the Remgro stake be worth then?

So that ZAR 4.5 billion estimated dividend to CIVH shareholders is to Remgro, New GX and CIH. And it gives you -- it gives Remgro 57% of the ZAR 4.5 billion. What was the second?

Just the -- on a pro forma basis, what the Remgro stake would be worth post transaction.

Carel, can you help?

Yes. It's roughly 19.5%. So the -- all the numbers are there that you can do the calculation. So if you had to take the 70% that CIVH will own in Maziv and you take the equity value of Maziv that's on a previous slide and then you take the residual debt that sits at the CIVH level and you take into account the dividend and you add all of that up, you'll get to sort of shy of 20%. I think it's 19.65%. And then just to state, we're not suggesting that is or isn't the number at which we would mark the investment. I'm just saying based on this transaction, that's what would come out.

And just on the debt, you mentioned that you used the numbers up until -- historic numbers. Can you remind everyone what the debt covenants ratios are now, what the gearing ratios are now?

So currently, it's around 4x.

The -- again, just back to the pre-implementation dividend, and it doesn't seem the rationale is quite clear. The question is why declare that and whether you want to comment on the speculation that a lot of that is driven by the minority shareholders and their view on valuation.

Yes, so what I can say is, and if you go into the record at the tribunal, part of the evidence I gave was because this transaction took so long, CIVH, for the fiber business started, looking for additional investors in 2018 already. We -- at COVID, we couldn't find any other investors, and we had to look locally because all the international interest that was there before COVID disappeared at the time. And Vodacom put up its hand and said, we are willing to invest. Then things started taking a long time. We assumed 18 months maximum. We're now sitting at 4 years. So the shareholders had to put in additional cash. If I remember correctly, we've put in -- since then, since Vodacom said, yes, we'll invest, we've put in an additional ZAR 10 billion into the business as CIVH shareholders. So we've always said we'll put it in, but it will be good to get some of that back one day. So when we consider the ZAR 4.5 billion, it takes into account what happens at Maziv. It also takes into account what happens at CIVH, the debt that sits there. There's a preference share there. But definitely, we're also taking into account what happens higher up because that ZAR 10 billion had to come from somewhere, and there are structures supporting that as well. So this is a balance to assist all the different structures.

Thanks for that. And then just on the Herotel deal, can you comment on what the EV/EBITDA multiple is that, that deal is being done at the CIVH level?

So there's the first piece, which is then the 49.96% that's in there that equates to ZAR 2 billion. And then the second piece, we don't know what the final valuation is going to be, but we've assumed a floor of ZAR 2.75 billion. It could be higher, but not lower than that. So I'm not going to give the detailed Herotel numbers, but on average, the multiple that I showed you on the last page is the multiple that you can assume across everything. And it's a good indication across all the different assets.

All right. And then a question for you, Carel. So given the net cash at the Remgro level and another potential for the dividend that's coming through from this transaction as well as no further capital calls on CIVH, what would be the intention or at least thinking from a Remgro perspective around the use of cash?

Thanks, Lwanda. So not something that we want to comment on today. Clearly, having the situation or the prospect of having it resolved would be a good milestone for us, and I think that it's out is one less uncertainty at the Remgro level. But we're in a close period. So -- and there's still some water that needs to flow under the bridge here. So commenting on exactly what our plans are with that cash is something we will do at a future point.

And also for you, the same question, I guess. And another one, Carel, just on the -- and I think you touched on it just now on the valuation and how we would be thinking about the CIVH valuation in the Remgro INAV calculation versus the reference point that has been provided now.

Yes. I think we should probably let the valuation process run its course. Obviously, that's something that we're busy with at the moment. If memory serves me, we're carrying the -- in our INAV calculation, CIVH is at around ZAR 15 million. As I said, this valuation is sort of shy of 2019 and a half odd. So it's reassuring to have some headroom between those 2. We're not uncomfortable with that. We also, as you would remember, apply some liquidity discounts and various discounts to arrive at our final valuation. But again, this transaction wasn't -- isn't for full control. It's for something pretty similar to our sort of shareholding. So we'll do the work and come to a landing. I don't want to preempt what the Valuation Committee will ultimately get to.

And just a last one on the Remgro piece. Assuming the option is exercised, we get to just below 35% indirect holding. How would we then be thinking about the investment in terms of what's core versus noncore and if we would consider additional partners?

I think 35% is a meaningful interest, certainly not something that changes our view on this valuation as part of our core portfolio. So certainly, between the sort of see-through of 40% or the see-through the 35%, there isn't really a lot in it. So certainly, this remains part of our core portfolio and the business that we've got lots of belief in the future prospects.

And maybe for both of you, the -- just looking at the experience that Remgro had with the Heineken integration post the deal and what happened there, what sort of safeguards and mitigants are in place to prevent a similar situation where you almost have to be impairing the asset just post that?

I'll start, and then Carel can add as well. So firstly, we're not buying a business that we have to integrate. We're buying additional fiber, and we could have just laid the fiber ourselves. So it's very different to integrating a business. We're not taking over any employees. We're literally just buying their fiber and opening up and changing their closed fiber into a wholesale fiber. So I think it's different to Heineken.

Yes, I would certainly say the complexity is meaningfully different. Of course, we don't want to underestimate what's involved. But yes, as I said, we think we -- this will be a lot less complicated than integrating what were 3 different businesses in the case of Heineken.

And Pieter, just on the regulatory process, can you clarify if the acquisition -- the Vodacom acquisition of Herotel has to go through a separate ComCom process or ICASA process?

So when we submitted the Herotel, it was submitted more or less at the same time, a month or 2 later, Vodacom. So in all of the work at the tribunal, it took into account Vodacom and Herotel control. So it's not -- it doesn't have to be a new process.

And just again on regulatory process, is there anything else that could be a potential hiccup outside of, obviously, the court having to take its own -- having to follow its own process in assessing the merits of the transaction?

So tomorrow is the appeals court. It is unknown what they will say, but it definitely looks better than it looked 2 weeks ago. But after that, the only outstanding approval then is the ICASA regulator. They have preapproved it, subject to finalizing the conditions. They have given us draft conditions, which we're happy with. But I suppose they just want to see what are the final competition regulator conditions and then they can also update their conditions. So I don't see that as a stumbling block.

And just on the Competition Commission's concerns, are you able to provide a bit of color on the quantum or at least the range that you're looking at from a CapEx commitment point of view?

So the commitments we're making, it's twofold. Firstly, we say that we are going to build from this financial year going forward. In other words, 1 April 2025, we'll build 1 million new -- or we'll pass 1 million new homes in our reach and key suburbs. This is not the Sandtons. This is Soweto, Alex, Khayelitsha, Mitchells Plain. We are further saying that for the next 5, 6 years, we'll commit to spending up to ZAR 12 billion, which equates to about ZAR 2 billion a year, which is more or less the run rate that we've used and what we are assuming going forward. So those are the main headline commitments that we've made. We've also committed that we will continue to compete. We've said that we will be competitive in those areas when we now start competing with Vodacom in Alex, for example. We're also saying that we will target certain levels of penetration in those areas. So it's a wide range of commitments that if we achieve it, it is good for the business as well as for the communities and for the customers.

Just on that, Pieter, the question is what kind of operational cooperation or coordination is allowable between Maziv and Vodacom? And what are specific activities that are disallowed based on the ComCom's agreements?

So they will have representation at the Board. They're not allowed to see everything that comes to the Board. They're not allowed to see detailed tariffs and detailed rollout. So at the Board, they will be able to provide strategic input without seeing all the detail, but they cannot have contact with management. They cannot ask management to design a new fiber product for me and for me only. Whatever we ever offer to Vodacom has to immediately be offered wholesale to the whole market. That's a commitment we've made. They have some shareholder rights. And those are definitely a lot less and where we started pre the competition process. But Vodacom is still happy with those. The competition authorities are happy. At least, the commission is happy with those. So they cannot influence the business in a way that will favor them ever.

And another CIVH question, Carel, but assuming this deal is done and approved, what's the next thing for Remgro?

I think fair to say we are -- we remain focused on those objectives that we have set out in our -- at sort of our Capital Markets Day and also before that at our interims. And still, a meaningful focus is driving the profitability and the performance of the businesses that we have. We think the -- generating the commensurate earnings and cash flows that supports our view of value is priority #1. So that remains priority #1. It'd be good to get this one done. If that's possible, that will certainly, I think, contribute towards that. But this in and of itself doesn't change our sort of objectives meaningfully. But again, we've got our results coming up in a couple of months, and we'll talk further then.

Thank, Carel. And Pieter, is there any indication yet on what the longer-term dividend policy would be for CIVH?

So firstly, we are committing to a dividend policy in our arrangement with Vodacom. So with the debt levels now at a level below the 3.5x that I've mentioned, after the CapEx commitments, I suppose we will pay out any residual cash.

And just last one on the webcast. Is there a time line that you anticipate for Vodacom to take up the option?

Yes. So the option dies on the 31st of March next year, but they have to keep in mind that they -- that we first have to do an independent valuation. So I suppose how long does that take? 2 months. They will probably have to notify us if they want to take it up at the latest stage by end of the year. And we do the independent valuation. And then they have 20 days after the independent valuation results come out to make a decision based on that valuation if they want to actually exercise the option. So they'll first notify that they want to look at the option and then the valuation, and then they have to decide within 20 days, but not later than 31 March.

Just a new question that's come in. The appeal court time line seems quite long given the support that you've received from ComCom. Is this like a committed time line from them? Or is it just our sort of conservative expectations?

So when we originally received the dates from them, it was set for 22 July to 24 July. They -- those dates are still in the -- but they have seen this through the commission's statement, but it's now 1 day only, which is tomorrow. But I suppose, depending on how tomorrow goes, it could be up to 3 days. But best case, it's the one they've set aside tomorrow.

But that's for the hearing, not for the results, just to be clear.

Sorry. So it's unknown. I have no idea how long it normally takes. Looking at past cases, we've assumed 8 weeks, but it could be a week.

And then the -- just the EBITDA multiple that you have, the 11.5, that's a trailing 12-month number.

Historic.

March '25.

March '25. That concludes the questions on the webcast. Can we take questions on the Chorus Call?

The first question that we have comes from Jonathan Kennedy-Good of Prescient Securities.

But more focus on the CIVH or Maziv outlook going forward. Could you give us a more granular sense of what the CapEx profile will look like in the next 2 years and then also what the effective interest rate would be on the debt post acquisition? And then also in terms of the houses or at least the number of homes passed, what is the connectivity rates at the moment? And is that what could -- if you drive that higher, is that really where the delta could come from in future revenue growth?

I couldn't hear all that -- we want to do forward-looking...

Yes. I think the purpose of this was really to unpack the terms of the transaction. Again, we're in a close period. So it wasn't really our intention to expand more broadly on the performance and penetration and outlook and CapEx and so forth.

We'll do that in September.

So we will do that with our results to the extent we can give more color.

Sorry, Jonathan.

[Operator Instructions] The next question we have comes from Rey Wium of Anchor Stockbrokers.

Just a quick one. I mean let's assume -- I see on Slide 4, you indicate the expected appeal court ruling by 30 September. Now I just want to know, more or less, how long after that can this transaction be concluded? I just want to -- just -- let's assume you get the ruling on the 30th of September. Is it a case of a week or 2 or a few months before we get to the final approval or the implementation date?

So the first thing that needs to happen after the appeal court ruling will be for ICASA to also make their final ruling. So that's why we've built in a little bit of headroom up till the end of November. But the actual transaction steps, there's not a lot that still needs to be done to actually pull the trigger on those. So it can be a lot shorter than that, but we've built in the flexibility up to end of November.

Okay. So it's basically the unknowns of those 2 approvals. And once you have that, you can implement the transaction?

Yes, correct. There's nothing remaining. It's just implementation of steps.

Okay. So safe to say this transaction could be better down before the end of the year, if everything goes well.

Definitely, yes.

Right. And then maybe I heard the previous comment that it's not a numbers call. But just broadly speaking, I mean the CIVH numbers in the Remgro's results, I mean you were in a loss situation, and that was largely because of the excess debt. So is it fair to assume that with this capital injection that the chances are quite good that you will now start to report a profit at the Remgro level for this investment?

Definitely.

Yes, I think it is. I mean there's a simple calc, obviously, that you can do, which is just to take the total cash that comes into the sort of whole -- or through the whole situation. Now cash will end up in different places. Some of it will sit in Maziv. A little bit of it will sit in CIVH, and the rest will sit with shareholders. But if you had to take the sort of that relatively small net loss and you assume that all the shareholders will end up with a portion of that, I'm not sure exactly what the number is, ZAR 9-odd billion, and you apply some rate to it, you could -- you should easily get to sort of profitability.

At this stage, there are no further questions on the conference call. I will now hand back to management for any closing comments.

We've just got one more question on the webcast. Again, on regulatory, Pieter, what are the BEE and ICASA licensing requirements for this deal? And what level BEE rating will Maziv have to have post the deal?

So the only requirement is actually BEE shareholding. Today, Maziv has a BEE shareholding above 40%. We are continuing to commit that it -- or it has to be above 30%. And each of the shareholders like Vodacom will have to commit to, say, at least 30% so we can maintain our ICASA license obligations. But as I showed, for example, if the option is taken up, our BEE shareholders, which is New GX and CIH, their shareholding actually goes up. So as far as BEE, we're in a very good position. We don't have to change any.

Thank, Pieter. It doesn't look like we have any further questions on the webcast either, so we can close.

Thank you, Lwanda. Thanks, everybody, for getting on this call short notice. We signed Friday afternoon, 3:00, or time was it? 2:00. This was -- unfortunately, we couldn't do it early the week. It's just how it happens. We had the long stop date on Friday, and we had to get all the agreements signed off. Tomorrow is the next big step. I'm going to go to attend the appeals court. I know it's been a long journey. But the end, it's hopefully in sight, and we will continue to keep you up to date and posted. Thank you, Lwanda.

Thank you. Ladies and gentlemen, that then concludes today's conference. Thank you for joining us. You may now disconnect your lines.