Africa Online seeks the higher ground by targeting the corporate market

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Pan-continental ISP Africa Online has been targeting the corporate market. Sales from this source have gone from 30% to half its turnover in two years. This means two things. Firstly, growth in the domestic dial-up market has hit a ceiling in most countries and no-one knows how to break through it and still make money. Secondly Africa’s multinationals have been slow to adopt web-based enterprise systems (particularly the banks) and this holds the promise of good growth from the corporate sector. Paul Sourabh, Corporate Head of Sales and Marketing spoke to News Update about the company’s new found area of success.

Q: How long has Africa Online been in the corporate business?

For two years and in that time it’s grown from 30% to 50% of the overall turnover of the company.

Originally we were in a joint venture with UUNet and there was meant to be a roll-out of it in all our countries. However after we’d established UUNet Kenya we realised there were a number of differences in shareholder view. So a good amount of our turnover now originates from corporate customers.

(Background note: UUNet’s parent company WorldCom was in trouble and it did not want to get drawn into a new, larger business area.)

Originally the "fit" had seemed a good one between corporate and consumer customers. We were predominantly in a consumer market business and there appeared to be scope to grow the corporate business.

Q: So where are you selling to corporates?

We’re in all countries where Africa Online is except Namibia. But we’ll soon be selling there as well.

What size is your current customer base?

The corporate consumer base is between 1000-2000 depending on the pipe size you’re looking at.

Q: What type of companies are they?

Well you’re looking at multinational PLCs, regional companies with a presence say in East Africa, companies with branches around a single country and in some cases, SMEs. The biggest of these are those in manufacturing. They take huge chunks of bandwidth as they need to communicate to and with places like London. The second largest category are those in financial services, companies like banks and insurance companies.

Q: Who are your competitors?

Anyone who can provide a reliable and dependable service backed up with a service agreement. We don’t compete on price. So it’s whoever can match that position. As you know, there’s not many pan-African ISPs so it varies depending on country and region. In the southern African region for example, there’s UUNet and Mweb and there are individual ISPs in different countries.

Q: What expansion plans have you got?

We’re developing our affiliate network. We’d like to cover the whole of the continent this way. It might not be a single ISP in the larger countries. We expect these affiliates to offer a certain standard of POPs. In most cases we want want a tier one or tier two operator.

We prove support on a dealer basis. The ISP could collect the money and remit it to us minus a percentage. So it’s an agency or dealership model in which we offer the branding, marketing and technical expertise.

Q: Where’s your bandwidth coming from?

We have a multitude of suppliers. There’s GDBC which we part own that has a teleport at a British Telecom site in London. The majority of it is supplied by them. We also have secondary links with international carriers or local telcos. Our international carriers include IP Planet and Sky Vision.

We also buy fibre on SAT3 in those cities where it’s available. We’re currently doing that for Accra in Ghana and Abidjan in Cote D’Ivoire. We’re also using the fibre ring in Harare.

Q: What’s the price comparison like between SAT3 fibre and the equivalent on satellite?

Fibre offers better performance and all said and done, fibre is more cost effective. It currently costs us 15-20% less but we are bulk purchasing.

Q: Is there a growth in traffic or are you simply taking other carriers’ traffic?

We are helping our clients explore the potential of using connectivity in their business. They tend to be PLCs who have not previously had the capacity to interconnect.

Internet dial-up subscribers by themselves will not provide much growth. What will provide growth is applications on the internet because there’s a need in say banks for real-time transactions. So there’s still growth in the African market, particularly in Ghana, Tanzania, Zimbabwe (which we find is growing in US dollar terms), Senegal, Cameroon and Nigeria. At a smaller level there’s Mozambique and Gambia. We’re talking about considerable growth over the next three years, on a year by year basis. Africa still has a lot of growth potential and there’s a lot we can do in revenue terms.

Q: How will you provide the management support for a continent-wide affiliate network?

We have a corporate team that works on this aspect of the operation: myself, the CFO, the CTO (out of Egypt) and HR and PR support. In-country, we also have General Managers who we can go through.