HeroTel acquires CT's biggest WISP

27 October 2017

Mergers, Acquisitions and Financial Results

The HeroTel group has acquired the largest wireless Internet service provider (WISP) in Cape Town, Sonic Telecoms, for an undisclosed sum.

"We are delighted that Sonic has joined the HeroTel Alliance. They are one of the largest WISPs in South Africa and will exceed 5 000 clients this year. That kind of growth comes from hard work and dedication," HeroTel chairman Alan Knott-Craig Jnr told ITWeb exclusively.

Sonic Telecoms was founded in 2011 by CEO James Wilkinson, with CFO Jean-Pierre Olivier joining in early 2016. Sonic has achieved a compounded annual growth rate in excess of 100% per year.

"We believe in James and the staff that he has assembled at Sonic. Getting this team to work closer with our other WISPs in the Western Cape will give us a platform for exponential growth in the region," Knott-Craig adds.

HeroTel has acquired 100% of the business, which is based in Montague Gardens, Cape Town. It says Sonic has a healthy mix of residential, small and medium business and large corporate clients. It operates across the Mother City, including in the CBD, southern suburbs, Atlantic Seaboard, West Coast, northern suburbs as well as outlying areas like Paarl and Somerset West.

"Reaching a deal to buy Sonic Telecoms is very much in line with our strategy to densify our coverage in urban areas," says HeroTel CEO Corne de Villiers.

"Through our acquisitions of Snowball, HX Systems and WISH Networks, we already have a large presence in and around Cape Town. This deal affords us the opportunity to close the coverage gaps that exist between the businesses.

"We aim to cross-skill the staff in these companies, pooling some of the key resources and management skills, so that all the WISPs can benefit from what we have learnt on our journey thus far," De Villiers adds.

"Sonic is the 24th acquisition for the HeroTel group and strengthens our position in the Western Cape," says HeroTel financial director Van Zyl Botha. "We have just completed a successful capital raise and are on the lookout for new opportunities all over South Africa."

Knott-Craig says the ability for WISPs to cater to different client needs is critical for them to grow in the markets they serve.

"Due to the high cost and low return for infrastructure players in rural areas, large portions of South Africa are unlikely to ever see the rollout of fibre. WISPs are perfectly suited to cater to these markets with their wireless solutions. However, those WISPs that operate in the cities can benefit by adding fibre and LTE-A to their existing product mix. Access to skills and the supplier agreements of these new products is one of the primary drivers for Sonic to join us," Knott-Craig adds.

Wilkinson says Sonic operates in a competitive urban environment. "Being part of the HeroTel group will bring new skills and capital, so that we can continue to offer industry-leading connectivity solutions to our clients. HeroTel is a national business that has economies of scale that include procurement of equipment and bandwidth. They provide network investment, as well as access to fibre and LTE-A products.

"HeroTel brings us greater choice with national partnerships for fibre to the home and to the business. We can now also offer LTE-A packages to those clients that cannot access our high sites," Wilkinson adds.

He says another exciting opportunity the WISP plans to explore is with the HeroTel estate fibre team which specialises in gated community fibre installations.

HeroTel has already announced two other deals this month, with the acquisitions of IGEN Wireless in the Eastern Cape and Hitech in Mpumalanga. The group now has coverage via its WISPs in Gauteng, North West, Limpopo, Mpumalanga, Western Cape, KwaZulu-Natal and Eastern Cape, making it SA's largest wireless Internet service provider.

Source: ITWeb