TISCALI’S NATALIE THAYER ON GROWING INTO A COMMUNICATIONS BUSINESS

Digital Content

Nathalie Thayer, General Manager:Portal talks to News Update Tiscali’s position in the South African market and how it is now expanding beyond its internet origins.

How did the company start?

It was set up as Yebonet in 1997/8. It was a Vodacom initiative and was a division in their group. Nina Brink of World Online came to South Africa and said she’d like to buy it. It then became Vodacom World Online. It then became a listed JSE company and there was a scandal because Nina Brink sold her shares before the listing. Tiscali bought it in 2000. It’s a Sardinan-based, pan European company that operates in 14 European countries and South Africa.

We’re looking to change the brand of the company. Thus far it’s been co-branded as Tiscali World Online but it’s now officially Tiscali.

How many subscribers are there in the market and what’s your share?

There’s about 2-2.5 million subscribers in South Africa, of which 6-700,000 are dial-up. We have 130,000 subscribers and were predominantly dial-up until we acquired NetActive which gave us 3000 corporate accounts. We now have 5,000 corporate accounts.

But you’re not just an internet company any more...

No. We’re a Vodacom cellular service provider, selling airtime. We’re moving towards being a communications company, not just an internet one. We’re a wireless data service provider offering 0800 numbers on a revenue-share basis for WAP and SMS data. We’re also involved in the SMS business.

Who are the main players in the South African market and what are they charging?

All the prices are very similar. MWeb has 230,000 subscribers and charges R140 a month. We’ve got 130,000 subscribers and charge R140 per month. Intekom has somewhere between 60-70,000 subscribers and charges R100 a month. The other ISPs are all little ones, second and third tier ISPs.

iAfrica is talking about coming back into the market again. Apparently they regret selling their ISP business. There’s a rumour that MSN will become an ISP and that AOL are looking to come into the market.

Why are you able to charge more than most of the main players?

It’s in the value-adds: 24 hour customer service, technical support, virus checking and spam filtering.

What’s the quality of connectivity in South Africa like?

Most people’s connectivity comes through SAIX (Telkom), UUNet or IS. For dial-up we use SAIX and IS. There arte big problems with Telkom in terms of cost and speed and there’s also no revenue share.

Are you hoping things will change with the SNO?

It probably will for the corporate business.

How big is the airtime/cellular business?

It’s been going for a year and is predominantly based on corporate business. These are high-end contracts with high usage. We’re able to cross-sell to our 5000 corporate accounts. We were a late entrant into the business.

Why get into these other business areas?

We’ve had a shift in business strategy. The internet is a tough business and the margins are small. Cellular has nice margins and the demand exceeds supply.

What’s the wireless data business?

It’s a very new business selling MMS applications. For example we sell competitions to ad agencies with a revenue share between us. Things like Big Brother, sporting events and so on. A lot of companies want to use SMS to communicate with their account holders and there’s also SMS marketing.

Your MD Graeme Victor resigned recently to "pursue personal interests". What’s the story there?

He took the company from a loss-making situation to a profit in three years. We’re now the most profitable company in the Tiscali Group. He wants to launch and run his own company.

We’re probably the only ISP making profits locally. Mweb is reporting large losses and spending a lot of money on TV advertising.

What’s the logic of a pan-European company having a single business in Africa?

We were almost bought by Nina Brink on a whim. But because we’re profitable they retain us. Tiscali is looking at other African countries, particularly one in North Africa.

How are cyber-cafes doing in South Africa?

There’s virtually no cyber-cafes. They’ve simply not taken off. They don’t make enough money. We have one retail shop and that’s a cyber-café.