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More businesses willing to head north?

By , Portals editor
South Africa , 24 May 2017

More businesses willing to head north?

Africa should expect to see a flow of entrants into its market following Liquid Telecom's R6.55bn acquisition of South African communications network operator Neotel.

The deal was given the all-clear by from the Independent Communications Authority of South Africa (ICASA) in mid-December 2016 and includes a partnership with South African investment group Royal Bafokeng Holdings (RBH), which has committed to take a 30% equity stake in Neotel.

The acquisition strengthens Liquid Telecom's mild presence in South Africa and breathes new life into Neotel to establish what is marketed as the single largest pan-African fibre provider, according to Michael Allschwang, Chief Sales and Marketing Officer at Liquid Telecom.

He says Neotel was waiting for the right partner, one that could address immediate and mission-critical shortfalls including leadership, strategy and financial resources, and resurrect a business that had slowed down.

The newly managed venture also presents clients with a better chance of success in markets north of the border says Allschwang.

"I have seen over fifty of our customers already and in every instance our customers have been absolutely thrilled with this acquisition... because they wish to expand north of our border and go into the African continent. They are now able to make sure that they have more of their services on net as opposed to trying to look at off-net providers where there are so many challenges around line of site, delays in services and prices... so I think people are very excited about the acquisition."

But having a steady springboard in place to take the leap into Africa is only one part of a broader challenge. Once a business arrives in their region of choice, service levels and quality are immediately put to the test.

Allschwang explains that the ICT and connectivity services market demands quality and is vast, and leaves service providers with a small margin for error. "If you build services, you've got to do so on a quality basis because if the services break, you have a very big challenge around trying to go out and fix those services. So you can't afford to do things second rate, you've really got to be first tier."

Multinationals with ambitions to expand their services and roll out unified communications, cloud services and the like soon discover that Africa represents a very different challenge.

This challenge is often restrictive to their operations and impacts on their ability to fulfil their technology roadmaps.

This is where Liquid Telecoms Neotel is geared up to add value, says Allschwang, because much of the hierarchical red tape that has stifled proactive response to technical challenges has been broken down.

The next frontier

Having access to a robust, reliable network is a must for those wishing to tap into Africa, which Allschwang describes as "the next frontier".

This was something Nic Rudnick, CEO of Liquid Telecom, spoke of in November 2016, a month or so before the acquisition was approved.

Rudnick said at the time: "The key thing about the Neotel transaction is to have one network and many countries, then (it) becomes easier to connect multiple branches, enterprises in multiple countries than it is to connect in one country."

Liquid Telecoms has the advantage of presence in many regions across Africa and is using this to engage directly with local partners, secure projects and business opportunities.

Its fibre network runs from the north of Uganda to Cape Town and currently spans 40,000km including the East Africa Fibre Ring and the first regional fibre ring on the continent.

The company continues to invest in network upgrades and is also busy with an aggressive marketing campaign to secure the buy-in of clients and potential clients.

Allschwang refers to growth opportunities in the market, including deals like the Liquid Telecom broadband agreement penned with Intelsat SA, and acknowledges that the market can expect a very different business in the foreseeable future.

He believes that the company is expanding and this is the focus going forward. "Absolutely I see us expanding our teams and expanding our business, but doing this in a new age way, in an exponential way. What our customers have seen is that challenges that they may have had in the past, questions that they had are being properly addressed ...we are solving real business problems. We are making our numbers and really, the market has been waiting for us. But of course, we are only judged by our ability to deliver and ability to rectify challenges."

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