Wananchi in aggressive expansion plan in Africa
Wananchi Online (now Wananchi Group), one of the pioneer ISPs in Kenya, has been shopping for funds to invest in its local operations. The firm is looking to broaden its horizons to eight other countries in the region.
The company’s new chief operating officer, Suhayl Esmailjee, spoke to Kui Kinyanjui about their plans and ambitions.
Q: Where (in terms of the company's history) is Wananchi coming from?
Wananchi has undergone more or less a complete transformation when it was acquired by the ATMT (Africa Telecom, Media and Technology) Fund. The attraction was the strong brand and the fact that Wananchi brought to the market affordable Internet solutions. Prior to the acquisition the company was perceived to have dropped the ball technology-wise and it was unclear as to what the strategy was. There was an ambitious plan by the Fund to also add to its treasure chest Africa Online, however this was not to be as Telkom SA bought AfOL.
The Fund then went ahead and acquired 2 other companies: Mitsumi Cable - a Cable TV operator and SimbaNet (KE & TZ) - a corporate internet/data connectivity operator.
Q: Please give us some detail and the rationale behind the company's recent acquisitions?
The rationale is simple - to become the first affordable, reliable and profitable triple play service operator in the region. Many people talk about triple play - we want to make this a reality and the acquisitions of Wananchi, Mitsumi & SimbaNet is a strong step into making this a reality. We now have instantly a platform to provide video, broadband and very soon voice service based on the technology and expertise acquired from the acquisitions. Wananchi as mentioned was largely for the brand and existing customer base whilst Mitsumi for a ready client base of about 11,000 over an existing broadcast cable platform + SimbaNet for its investments in VSAT hub in Kenya and strong technical acumen in Kenya and Tanzania.
Q: What are your expectations from the board meeting taking place?
We expect to get budget approval for the next 2 years in terms of the funding required to build out a cable plant covering at least 300,000 homes as well as rollout of a WiMax network for broadband. The board meeting ratified the management team's plans on the business that included the infrastructure development and tactical plans on how we take the services to market including marketing strategy etc.
Q: In a nutshell, what is your future strategy for the company?
As mentioned the strongest proposition is the triple play agenda. We want to deliver over a single platform Voice, Video (TV) and Data (Broadband Internet) services in a manner synonymous to what is happening in the developed countries. We plan to provide a bundled service with a single invoice for all the services. The investments to make this happen are close to $50M over the next 2 years including the rebuild of the current cable network to allow triple-play including the investments in the systems required to support an aggressive growth of subscribers. Since the cable build will take long, our plan is to address the broadband agenda by rolling out a WiMax network with about 130 base stations largely focused in the 1st year.
Q: The home market is said to be the next frontier for ISPs. How will Wananchi differentiate its offering on that front from other providers?
Again the answer is to enhance value offering and this is through the triple play service proposition. We already have 11,000 customers on the cable TV platform and about 10,000 on Wananchi on different services that we intend to migrate on the WiMax platform and eventually cable as it spreads in the region.
Q: How much are you planning to raise from local investors?
We have already raised $10M from local investors - largely the Wananchi shareholders and the rest from venture capital plus debt from OPIC. This is at the fund level where the fund targets $100M 50-50 on equity and debt. $50M has already been raised and disbursed – the board was to approve the plans for the next 2 years.
Q: Which technologies will Wananchi be rolling out?
As mentioned initially the WiMax platform for broadband in the first year and HFC cable network to high to medium density locations and FTTH in remoter areas like Karen etc. Both networks are planned for Nairobi and Mombasa. Once the cable reach is significant we plant to relocate the WiMax base stations to other urban cities and towns of Kenya.
We also plan to rollout out our own metro fibre backbone covering the whole of Nairobi and Mombasa. This will be used to provide corporate services – particularly IP bandwidth to corporate as well as backhaul traffic from our base stations.
Q: How do you perceive the entry of foreign owned companies in the ISP arena such as Africa Online and IS Solutions? Do they pose a threat to your business - why?
At present the competition is expected to get to hyper levels particularly in the broadband space. With players like Safaricom, Celtel, AfOL, KDN, Access Kenya, Telkom Kenya gearing up for the market – we envisage the space to be very very competitive. However, with a strong value proposition of high-speed broadband Internet, entertainment on more than 100 TV channels, reliable voice all offered as a single service at an affordable price compared to buying all 3 independently, we believe this will be the strongest propositions compared to the individual competition. Also the fact that we are focusing on cable as the eventual platform for all services, positions us strongly since wireless technologies will never be able to compete in terms of bandwidth especially when the IP bandwidth becomes insignificant after the submarine fibre lands.
Q: How easy is it to get funding for ICT ventures in East Africa compared with other parts of the world?
Provided there is a business case, the funding is available. We are backed by media moguls like the Schneider Group who have built successful media operations in various parts of the world together with various investors locally plus a US government state agency (OPIC) who have also backed the venture.
Q: Who is your biggest competitor?
Nobody on the triple play arena but several on the broadband front, and DSTV and GTV on the TV side.
Q: Has your stake in TEAMs been confirmed?
Yes – 10% i.e. 100 STM-1 capacity = 100Gbps