South African company Africa Venture Partners is launching a multimillion-dollar venture to provide satellite-based voice and internet communications across the continent. An initial USD28.5m investment will cover the launch of services in Nigeria and Ghana, and the company plans to raise more cash to operate in 10 countries within two years.

Africa Venture Partners, led by co-founder Robert Tibbs, has persuaded the Industrial Development Corporation of SA and the European satellite operator SES Astra to become equity investors. Together they are the three shareholders in new company IP Direct, which will operate the service.

IP Direct has opened offices in Ghana and Nigeria, and is building an earth station in Lagos to handle transmissions. The signals will be broadcast via a satellite operated by SES Astra, which is the technical partner as well as a cash injector. The offices in Ghana and Nigeria will soon begin selling satellite dishes to businesses keen to access the internet, send email, transmit data and even make voice calls via satellite.

One reason IP Direct is not launching on its home turf is that SA’s telecommunications laws do not let private operators carry voice calls over their networks unless they do so as agents for an existing licence holder. "We are committed to operating in SA, but the regulatory situation is an issue," says Tibbs.

"We would need to work with an existing operator and with the second network operator not yet finalised we are focusing on Nigeria first. " However, Tibbs says that IP Direct could enter SA within a year if it could reach a commercial agreement, perhaps with Telkom or with black empowerment firms that will soon be licensed to offer telecoms services in untapped rural areas.

What should make the service a success is the dire lack of basic telecoms services in many parts of Africa, says Tibbs. He cites the phenomenal growth of the cellular operators MTN and Econet in Nigeria as an example.

"The opportunities for this business are tremendous. We have been in towns in Nigeria where there are a couple of million people and the major traders go to a public phone box to conduct their business because the land lines are not there or not reliable," he says.

While other companies offer satellite-based internet and data services in Africa, none has raised as much capital or won the technical support of an international satellite operator to give them the scale to move across the continent, says Tibbs.

"Until now satellite services have focused on high-end corporations, but we will bring the price down far enough to be cost effective for small and mediumsized businesses.

"We expect voice services to drive the demand along with internet browsing and e-mail services, and we are looking for a few thousand subscribers. "

IP Direct will sell the connectivity, install equipment and run customer support centres to ensure a high quality of service.

The initial USD28.5m will fund its services in west Africa, which should go live by year’s end. Revenues should accrue from January, with profit expected by year three or four. Expansion into other countries will require additional funding, making this the largest single internet access investment in Africa, says Tibbs. The chief operating officer of IP Direct is Jock Anderson, a founder and chief technology officer of M-Net and MultiChoice satellite TV services.

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