Apr 29, 2016

Minnow makes giant strides in fibre roll-out

March 2016 was a heck of a month for banker-turned-telecommunications entrepreneur, Steve Booysen.

Billionaire Patrice Motsepe has backed Booysen’s MetroFibre Networx to the tune of R220m. The deal represents an 18.14% stake for Motsepe’s African Rainbow Capital (ARC) in the fibre network and infrastructure provider.  

“We are currently in the process of raising R400m additional capital to grow the business,” Booysen explains, adding: “The African Rainbow Capital investment is part of that capital-raising process. We still need to raise a further R180m to complete the capital raise – any interested investors are welcome to contact me,” he says, not wasting any opportunities to make his pitch. 

The investment is required for MetroFibre Networx to expand its network footprint, upgrade the capacity of the network and improve the levels of service to its customers.

The company also enjoys active shareholding from Sanlam Private Equity (SPE), which has representation on the MetroFibre Networx board. SPE invested in the fibre company in 2013 to grow its own fibre network, marking the first investment of this nature for SPE. 

When asked how one goes about negotiating a deal of this magnitude, Booysen explains that he sticks to basics: “I don’t subscribe to opportunistic approaches,” he says, “but rather work from illustrated value, backed by a prudent business case, business model and a management team that subscribes to, and lives by, a sound value system.” 

MetroFibre is a smaller and relatively newer player in the industry, compared with the pioneers like Vumatel, the company that launched the first fibre neighbourhood in Parkhurst, Johannesburg.

This gives the company an advantage, explains Booysen, because it is able to build on newer carrier-grade ethernet technology, without having to worry about interfacing with legacy technology.

“Our size allows us to be agile and make fast decisions, which enables us to quickly adapt to customer requirements,” adds Booysen.

“We are an open-access partner, allowing other participants in the market to compete for the customers’ business. Consolidation in the sector is inevitable and that will result in opportunities for corporate activity.”  

Consumers crave faster internet

As businesses increase their reliance on cloud services, and with private consumers eager to explore the possibilities of video streaming, the demand for better bandwidth and more reliable connectivity has skyrocketed. Fibre provides a cost-effective step up from ADSL for such consumers.  

Fibre-to-the-home (FTTH) allows consumers to access IP telephony and videoconferencing (via Skype, for example) services as well as allowing them to use high-quality video streaming of entertainment services like Netflix and Showmax with ease.

Businesses, on the other hand, look to fibre so that they can cost-effectively implement cloud-based solutions, engage a distributed workforce or partner network without leaving the office, or reduce telephony costs. 

Telkom has ambitious plans to provide access to half a million homes by the end of 2016, a figure described as unrealistic by industry pundit Arthur Goldstuck of World Wide Worx.

Nonetheless, homeowners in Johannesburg’s “mink and manure” suburbs (read Sandton and surrounds), have been signing up for fibre-based internet in their thousands. 

MetroFibre Networx is one of several companies currently digging up the sidewalks and laying brightly coloured cables in the country’s main centres.

The company, in which Booysen has a solid personal stake, owns and manages SA’s first globally compliant Carrier Ethernet 2.0 (CE 2.0) open-access fibre network. CE 2.0 is a next-generation network protocol that provides improved access, scalability and reliability. 

Telecoms is an important sector, Booysen points out: “Telecoms is recognised as the fourth utility after roads, water and electricity (energy). Fibre connectivity is in its infancy and the market will expand exponentially in the next five to seven years, resulting in countless business opportunities. It is a fast-paced, ever-changing environment. The FTTH explosion is an exciting space to be in.”  

What does the future hold?

Looking to the future, Booysen sees a communications industry that will remain in flux for some time.

“The industry pulls together an enormous number of suppliers and consumers at the forefront of technology development, which opens innovation at an unpredictable, almost explosive manner,” he says, adding: “Gone are music stores, book shops and a number of other sectors are struggling to reinvent themselves [and develop] new sustainable business models.” 

Booysen warns that congestion of the wireless spectrum, especially the frequencies that allow for mobile access, is going to place more demands on the fixed-line system – also known as the backhaul.

And while the ongoing advances in fibre technology improve the performance of networks, the growth in bandwidth demand is going to outstrip the available infrastructure.

“Bandwidth, specifically to homes, will grow exponentially over the next five to seven years. This growth will be driven by new applications still not known yet – an exciting prospect,” Booysen adds. 

Technology, he believes, is “the single biggest leverage point to turn the success of a country”. He continues: “The hope is therefore, that local government will embrace fibre optic roll-out programmes, which will result in economic and social well-being for their residents and entrepreneurs. A fibre-connected community has the potential to enable the efficient and cost-effective delivery of services such as health, education and social upliftment.” 

Like most successful entrepreneurs, Booysen has had several mentors who influenced him. “I had four mentors during my lifetime,” he says, adding: “The first one taught me discipline, hard work and that commitment will stand you in good stead. The second one taught me to listen to fellow colleagues because it will enable you to take more informed decisions to the benefit of the organisation. The third one taught me to believe in yourself, be unconventional and let people underestimate you at their peril. The last one taught me to stick to your principles no matter what, live your values and to be humble about your achievements.” 

Ask the banker-turned-entrepreneur for the greatest leadership lesson he has learned, and he shares the following: “You never stop learning. Decision-makers will always make mistakes – the important lesson is not to repeat them; take swift corrective action and move on. When taking decisions, leverage the wisdom at your disposal – often your leadership team, colleagues and mentors.”

This article originally appeared in the 21 April 2016 edition of finweek. Buy and download the magazine here.