Dimension Data division Internet Solutions (IS) is ramping up its expansion into the rest of Africa and sees the continent as one of the key pillars of its growth plans.
IS has created a presence in both East and West Africa, with offices in Ghana, Nigeria and Kenya - all created through the acquisition of established local players in those markets.
IS business solutions director Hillel Shrock says the strategy is to provide Internet and related services to multinational companies, particularly SA companies, that are expanding their operations on the continent.
WHAT IT MEANS
Strategy is to focus on multinationals that are expanding into the continent
"What we set out to do is make sure we can give our customers services in any African country they choose to do business in," Shrock says. Where a market is of sufficient size, IS typically buys a stake in an established company, with management retaining a meaningful minority equity interest. "The idea is to provide end-to-end services within those countries so you get a uniform approach to systems, people, support and service."
For now, IS is focused on supplying services to larger companies in Africa. It provides networks that offer a stringent quality of service, as well as data centre hosting. But it will also provide services to companies smaller than its typical clients in SA, which tend to be large, blue-chip organisations.
In the long-term, IS expects that its non-SA African business will contribute at least as much to revenue and profits as its SA operation. Meeting that target will, however, be dependent on the economic performance of the large Nigerian market, says Shrock.
IS relies on local management teams to run its African businesses. But it does place IS-trained managers on the ground to ensure uniformity of services and adherence to IS business principles.
"We need to be riding the growth curve as the macro-economies and telecom requirements change" - HILLEL SHROCK
Doing business on the continent has unique challenges, of course. Infrastructure in many areas is poorly developed, and IS still has to rely to a large extent on satellites to provide international and even in-country bandwidth - an expensive proposition. Where fibre exists, it's often of poor quality. "When we leave the confines of the urban areas, we struggle to get decent service [from telecommunications operators]. But one of our competences is managing those suppliers."
In some markets, such as Kenya and Nigeria, IS is able to build its own infrastructure, though it is only doing this on an ad hoc basis where it makes financial and logistical sense.
Despite the challenges, Shrock says IS regards it as essential to get in early into these markets. "We need to be riding the growth curve as the macro-economies and telecom requirements change."
There is a pent-up demand for services, as the mobile telephone providers have aptly demonstrated. This demand is not limited to cellphones, Shrock says.
Of course, the cellphone providers could eventually become a competitor to IS. Though most are still focused on providing basic voice telephony, over time they will expand into providing Internet access to consumers, and later to business customers, as they are doing in SA as the market matures.
But it may take some time before this happens as "there is still a lot of room for growth in their traditional core business of providing mobile minutes and data", Shrock says. "Of course, should their strategies in SA work and enhance shareholder value, they will look to do some of what they've done here elsewhere."
By then, however, IS should have established itself as a significant player in converged telecom services on the continent.