Knott-Craig in new telecoms venture
HeroTel, which has the backing of former top bankers including Michael Jordaan, wants to consolidate the wireless Internet service provider industry and provide a national alternative to incumbent telecommunications operators. By Duncan McLeod.
Project Isizwe CEO and former iBurst boss Alan Knott-Craig has launched a new wireless Internet service provider (Wisp), HeroTel, to provide wireless broadband to homes and businesses, TechCentral can reveal.
Knott-Craig wants HeroTel to help consolidate the Wisp industry — made up of more than 200 providers around the country — to provide a national alternative last-mile broadband service to end users.
The new business has the backing of former First National Bank CEO Michael Jordaan, former Rand Merchant Bank (RMB) CEO Mike Pfaff and former RMB chief investment officer Derek Prout-Jones. It was founded following the acquisition of Snowball, based in Stellenbosch, and Cloud Connect, based in George, and is funded by an investor consortium. It’s understood that HeroTel has already attracted a valuation of R200m.
Knott-Craig estimates that South African Wisps have combined annual revenues of R700m.
Knott-Craig, who is also a former CEO of Mxit and who has invested in a number of start-up businesses over the years, founded Project Isizwe, which, with the financial backing of the City of Tshwane, has built a network of free Wi-Fi hotspots in the greater Pretoria area.
“HeroTel plans to consolidate the Wisp industry in order to provide a single national wireless broadband provider,” he says. “South Africans need fast, reliable and affordable broadband and are increasingly looking for an alternative to ADSL.”
But, he says, fragmentation and a lack of coordination between Wisps make it hard for them to tackle the incumbents head-on. “HeroTel plans to consolidate the disparate regional wireless broadband providers under a national brand and unlock the economies of scale.”
Knott-Craig says HeroTel will differ from traditional data network providers, which, he says, “employ the age-old methodology for network roll-out of high capex, centralised control and proprietary technology”.
“The old ways only make sense when the operator can generate revenue from high-margin voice calls,” he says. “Pure-play data networks do not have the luxury of selling minutes, which is why today’s data networks continue to struggle to provide a suitable return on capital for investors.
“The truth is that consumers want faster speeds and lower prices every year. Instead of fighting that demand, Wisps have figured out a way deliver the goods while making a profit. HeroTel has taken the lessons learnt by Wisps to reduce the cost of deploying and operating a telecoms network to a point where it is profitable to provide fast, reliable, affordable broadband to the public.”
Backer … Michael Jordaan
The company plans to launch officially to consumers on 1 April next year. Before then, it is working to integrate Wisps under a unified network and brand.
Knott-Craig is executive chairman of HeroTel, while Corne de Villers has been named as CEO. Francois Wessels is chief operating officer, Ilem Rautenbach is chief information officer and Van Zyl Botha is its chief financial officer. Knott-Craig will remain CEO of Project Isizwe.
The involvement in HeroTel of former FNB CEO Jordaan, who is also an investor in Multisource — the company in the process of buying iBurst and Broadlink parent Wireless Business Solutions (WBS) — is likely to raise questions about whether some sort of tie-up with WBS could be on the cards. But Knott-Craig says HeroTel has “absolutely nothing to do with Multisource” and does not have “any imminent plans to deal with WBS”. — © 2015 NewsCentral Media