The Sunday Mail
Turf wars to control the broadband market are heating up. As the scramble for customers in a largely tight market continues, Internet service providers (ISPs) are devising different strategies to win both the heart and the wallet of consumers. And this also includes unorthodox methods.The potshots traded between Zimbabwe Online (ZOL) and TelOne are showing no signs of abetting. TelOne, a parastatal that is slowly regaining its footing, is now leveraging on broadband services to set itself on a path to sustainable growth.
Last year, the company’s revenues declined to US$138 million from US$157 million in 2014. However, broadband services contributed US$28,7 million in revenues in the period.
ZOL, on the other hand, has been on an aggressive growth path, buoyed by 2012 acquisition by Liquid Telecom, a subsidiary of Johannesburg-based global telecommunications giant Econet Wireless Global. Not surprisingly, the ISP offers a buffet of internet services such as fibre, VSAT and wireless internet.
Liquid Telecom has been working on one of the longest fibre networks stretching 17 000km from Lesotho, South Africa, Zimbabwe, Zambia, the DRC, Uganda, Rwanda and Kenya.
It is widely thought to be the company that will first accomplish the Cape to Cairo conquest – largely cherished by Cecil John Rhodes — in the corporate sector. The company also operates satellite internet facilities in the United Kingdom, Botswana, Nigeria, Zimbabwe, Lesotho, Somalia, Burundi, Niger and Kenya.
ZOL, therefore, is arguably the country’s biggest internet company in terms of infrastructure, volume of traffic and customer base. ZOL management could not be drawn into revealing the firm’s investment in broadband so far and plans for the future last week after officials had not responded to emailed questions by the time of going to print.
Investment
Parastatals and state entities — often bogged down by Government bureaucracy — often play second fiddle. But TelOne has been trying to compete with private players. To date, more than US$10 million has been sunk in infrastructure upgrades.
TelOne’s corporate communications manager Mrs Melody Harry told The Sunday Mail Business the company was evolving to become a “world-class Fixed-Mobile Converged communications service provider”. A US$98,6 million loan from China-Exim Bank will help the parastatal to rehabilitate and modernise its infrastructure, including deploying broadband services to more areas.
“Our Internet service has experienced phenomenal growth. Data is the future for the telecommunications sector and TelOne has transformed to become a broadband company complementing its traditional voice offering hence the massive investments in broadband deployment.
“Internet and data services are now contributing close to 40 percent of TelOne revenues,” said Mrs Harry.
TelOne also offers voice over Internet protocol (VoIP) and virtual private networks (VPN) to enterprise customers, which is said to have become a hit with clients as they are able to manage their communication costs.
There are plans to roll out the fibre to home project (FTTH) in the country’s major cities. To date, the ISP have connected 15 000 homes and the target is to connect 25 000 by year-end and 100 000 by 2018. Similarly, public wifi spots will be increased from 20o to 600 by 2018.
Girding loins
Another ISP, Africom Private Limited, is planning to aggressively relaunch itself in the market. The company, which was formed in 1995, managed to survive extremely difficult period in 2011 when some of its directors were arrested.
Africom MD Mrs Rudo Mudavanhu told The Sunday Mail Business there are plans to immediately commit US$10 million into broadband, with $2 million being channelled into wifi and US$8 million into its 4G network.
Already, the company offers several services such as local area networks (LAN) using cable and wireless technology, network audits and documentation, wide area network solutions using VSAT, fibre on the Harare-Mutare route and in metros and VPN links via Internet. Since the start of the year, Africom has rolled out more than 60 sites “to ensure that access to internet becomes prolific and the cost of access be significantly reduced”.
The company has also invested in 4G wireless technology which is expected to be rolled out in September this year.
Mrs Mudavanhu said the target is to shift the focus on internet access to value added services, “those things that people get do when they get internet, those things are what should attract a fee at action should become the chargeable unit”.
Africom has about 200 000 registered subscribers. About 58 percent of the subscribers are “purely data subscribers”, representing the percentage contribution to the firm’s revenues.
Though presenting bright prospects for future economic growth, NSSA, which is one key investor in the institution, has not been particularly active in the business.
While its exact shareholding in Africom could not be ascertained last week, NSSA used to hold a 43 percent stake in the business.
One of Africom’s main strengths is that is offers portable wifi services. Currently, the company is in discussions with Chinese telecommunications giant Huawei with a view to introduce wifi in buses and kombis. Some African countries such as Zambia and Kenya already have wifi in commuter omnibuses and a traveller gets a password from the driver upon boarding.
Discussions with the Postal Telecommunications Authority of Zimbabwe to “evolve the current wifi limitation from gated communities to open air” are currently underway.
Priced out
But the increased jostling for the market has not materially impacted on pricing.
Service provision is only confined to major cities such as Harare and Bulawayo. Outlying areas remain without coverage.
By the end of last year, Zimbabwe’s active internet subscriptions had risen to 6,6 million, according to Potraz. As a result, the national internet penetration rate was measured at 48,1 percent. Mobile Internet made up 95,6 percent of total internet subscriptions.
However, ISPs are crafting ways of ensuring that broadband costs are significantly lowered to encourage increased use.
ADSL broadband packages now range from as low as US$15 for 2Gig up to US$150 for unlimited packages, while fibre packages start from $36.
For users on the go, TelOne public wifi packages start from as low as $1 for 1Gig which is 90 percent cheaper than other service providers.
But even then the prices are still considered steep for ordinary subscribers. Service providers are however agreed that prices will be reviewed downwards with time.
