AFRICA ONLINE’S NEW CEO LAYS OUT HIS STALL

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In an interview last Friday, Africa Online’s new CEO talked to Russell Southwood about his strategy to revive the company and renew faith in its pan-continental brand. He spoke frankly about how he sees competitive markets and the kind of opportunities the company will pursue.

Q: Why did Telkom buy Africa Online?

It links immediately with the pan-African acquisition target Telkom has set itself and its desire to create a presence across the continent. It’s been looking right across the IT scale (at potential acquisitions), including fixed and mobile service providers. Africa Online gives us the opportunity to immediately get into eight countries and the ability to opportunity to expand in each of them. It gives us immediate access to the existing licences and the potential to acquire new licences in these territories.

In addition, we have affiliates in 20 countries where they are resellers of our corporate connectivity services. We’re searching for affiliates in those countries where we currently don’t have a presence.

There’s a also number of carriers in South Africa and the Far East who want to be able to deal with one service operator. We’re also talking to major European carriers who we will be pursuing to set up agreements to provide corporate connectivity and obviously similarly with Telkom SA. It’s always had difficulties with a number of corporates about creating a presence across Africa to meet their needs, companies like retailers and banking organisations, to provide reliable connectivity in their branches.

Q: What about the competitors in that market?

There’s very few competitors in that space and that’s what makes it attractive. We’ve also had discussions with providers in Hong Kong.

Q: What’s the current subscriber base across the eight countries?

There’s around 15,000 subscribers.

Q: So where are you starting from?

We’re offering dial-up and broadband access. The broadband we’re rolling out is using iBurst which is already set up in Kenya and Ghana. We’re currently sorting out spectrum licences to roll that out elsewhere. Our main business will become broadband. We want to significantly grow existing services and add growth in new markets.

There’s currently limited iBurst coverage in Kenya with only Nairobi and Mombasa but we’re looking to expand.

Q: What kinds of things will you be investing in?

There’s currently a limitation on operations that we need to address to increase the top line. The way we do our business is limiting the number of orders per month we can handle. We need to invest in IT systems for process flow.

There are limitations on connectivity and bandwidth. We need to increase in-country connectivity and international connectivity and get subscriber numbers up. We need to look at our initial technology choices – iBurst – and then have a wireless base station roll-out.

We need to expand services like good quality VoIP services. We’re trialling these within African Online at the moment but we have to do a lot more to improve them. We need to invest in products like VoIP and video calling.

Q: What about investment in the brand?

I’ve picked up on the history of pride with the brand but this has faded over time. We need to create a passion for the brand in Kenya and other countries but also outside of the continent. Customers need to know what they might get so it’s the brand plus the quality of the product. The brand association should be quality and price.

I see a lot of other ISPs advertising here in Kenya and elsewhere and we need to create our own external profile. But we also need to do create that profile internally within the company so that Africa Online is the employee of choice.

Q: You mentioned the need for more plentiful, cheaper bandwidth. What’s your attitude to SAT3 and the new East coast fibre projects?

My opinion is that there’s a real urgency to get an undersea fibre cable landed on the East coast. It will change the whole ICT marketplace in East Africa. It changes the capacity of price per consumer that would be possible and provides quality connectivity.

I believe that the prices we now see on SAT3 and other projects are coming down. I’m flying to the west coast later this month to discuss this. We have to have more investment in fibre projects because it’s a supply and demand issue.

Q: Will you be focusing only on services or will you also look at infrastructure?

There’s some discussion on the West coast of Africa about looking at providing some infrastructure. Specifically we’re looking at bandwidth provision to other ISPs in some countries. There’s discussions about facilitating that so investment is focused on the service layer but progressing infrastructure and connectivity.

Q: Will demand increase if prices come down?

Even without price reductions, demand is not being met. We’re moving forward on broadband in Kenya and it’s going to be very competitive. We need to remove the bottlenecks and offer more cost effective offerings. There’s a great deal of demand there but it’s not being fulfilled because of the limitations of current coverage.

Q: How does it feel being in a competitive market?

I’ve seen greater liberalisation in East Africa than down in South Africa. Regulators in the region have moved more quickly towards competition and deregulating the marketplace.

Within the South African marketplace, there’s great competition but there’s a need from the regulatory point of view to change the landscape more. The reality’s there but there’s the need for more implementation.

Q: Telkom SA has expressed interest in buying Telkom Kenya. How would it work? Do you buy it or does the parent company?

Africa Online is looking to expand. We’re looking at ISP operations, new markets and new licences to grow. However, we would not look at buying into Telkom Kenya as Africa Online. Telkom SA’s expansion plans are looking at all operations throughout Africa and that’s what they’re really pursuing.

We are operating as an arms length subsidiary but generating synergies between the two operations.