Paratus’ infrastructure spend pays off

Locally-listed Paratus Namibia Holdings (PNH) invested N$75 million in infrastructure in the second half of its financial year, mainly expanding capacity and enhancing customer access to the current network.

Although lower than the N$123 million invested in the same half-year of 2022, Paratus said its infrastructure investment aligned with its financial strategy for its 2023 financial year. The strategy prioritised limiting the establishment of new sites and fibre in new areas, instead focusing on acquiring new customers using existing infrastructure.

“This strategic approach has yielded positive results, as evidenced by the growth in recurring revenue,” Paratus said on Friday when it released its latest interim results.



Revenue

The group generated revenue of nearly N$281.1 million in the six months ended 31 December 2023, up nearly 26% or N$58 million compared to the same half-year in 2022.

This growth was primarily fuelled by the expansion of fibre, SKY-Fi and LTE networks throughout Namibia, as well as capacity sales on the Equiano subsea cable and the utilisation of the Data Centre, Paratus said.

“With infrastructure expansion funded from operational cash flows, Paratus is well-positioned to sustain revenue growth,” the group added.

The group’s operational entity, Paratus Telecommunications, reported an increase in recurring revenue to N$249.8 million, up from N$200.3 million in December 2022, marking a growth of 24.7%.

Non-recurring revenue, including income from local area network installations and telecommunication equipment sales, saw a significant increase to N$25.9 million, representing a growth of 41.5%.

“Despite a strategic focus on growing recurring revenue over lower-margin non-recurring revenue, the company continues to see substantial overall growth,” Paratus said.



Equiano

Up to 31 December 2023, a joint investment of N$17.3 million was made with Paratus Botswana for constructing a fibre line connecting the Equiano subsea cable in Swakopmund to Johannesburg via Botswana.

Paratus expects to wrap up the project this month, at an estimated total cost of US$2.55 million, or about N$46.7 million.

“The investment in infrastructure augurs well for the group, as indicated by the improvement in the Ebitda margin,” Paratus said.

The group reported earnings before interest, taxes, depreciation and amortisation (Ebitda) of N$121.3 million for the six months under preview, an increase of 63% year-on-year (y/y).

“This improvement stems from the cost savings achieved through the utilisation of proprietary infrastructure, as well as the expansion of the customer base on existing network infrastructure,” Paratus said.

Outlook

“The economic landscape in Namibia has demonstrated robust growth over the past two years, with an approximate 6.4% increase in 2022 followed by a 5.6% rise in 2023, primarily propelled by the mining sector,” Paratus said.

Additionally, ongoing exploration activities in oil and gas have contributed to this positive momentum.

“Despite inflationary pressures and a high-interest rate environment, which are likely to constrain household spending, the overall outlook favours continued growth for Namibia in the foreseeable future,” Paratus said.