Niel Schoeman, CEO of telecoms start-up Vumatel describes himself as a serial entrepreneur and believes South Africa “is the place to be” for those wanting to start a business.
In only 18 months the company, which offers high-speed and open access internet using fibre broadband connectivity in partnered neighbourhoods, has made its way into 42 suburbs in Johannesburg and Cape Town. Vumatel plans to spend around R3 billion in the next few years to roll out home fibre to 200 000 homes in 100 suburbs across South Africa.
“There is a higher purpose to the product we sell,” Schoeman told a Forum at the Gordon Institute of Business Science (GIBS). “Fibre has the potential to bring transformational change to urban areas.”
He explained South Africa has been behind the rest of the world in terms of internet speed and cost and that investing in broadband penetration would enable access to information and act as a lever for the economy.
Fibre throughout Johannesburg would allow the metropolitan to become a smart city: “The change that we will encounter over the next two years is going to be exponential. The smart city and the ‘Internet of Things’ is really going to hit us,” Schoeman said.
He attributed much of the young company’s success to its dedicated focus on customer service and its capacity to respond quickly to challenges.
“While the ‘deep pockets’ of the more established telecoms is an advantage, the ability to be nimble is even more crucial in today’s market,” Schoeman said.
Laying fibre trenches is essentially a community-based project and it is important to get the community involved and build an emotional connection, as had been done in their Parkhurst pilot project he explained.
“We are obsessed with making our customer experience a good one. The product is great, but it is the experience that counts. We try to give control to the customer, rather than trying to control the customer through our own internal processes,” Schoeman said.
The uptake of Vumatel’s services had exceeded everyone’s expectations, and “there is definitely a first mover advantage in this business.”
Schoeman said managing the rapid rate of growth experienced by his company – which has grown from just five employees to 375 – is one of his biggest challenges. He aims to keep the passion for a customer-centric business in every individual who joins Vumatel.
While there is likely to be some consolidation in the industry over the next few years, Schoeman said Vumatel was not looking to become a target: “We have barely started our journey. There are still one million homes to be connected.”
Vumatel decided to choose an open access model for its network, where anyone can lease access to the infrastructure, making it available for use on a fair and equitable basis.
While trenching and laying individual fibre to every home in a point-to-point system is an expensive approach, Schoeman explained it is a long-term solution and an infrastructure investment in a utility that would allow for huge amounts of future capacity.
South Africa was making major fundamental mistakes in the deployment of broadband infrastructure with public sector players attempting to compete with private providers: “What we need is public private partnerships. There is a duplication of infrastructure as everyone is trying to monetize it.”
By incentivizing the private sector to follow a more developmental mandate, government could encourage investment in poorer areas. “With more co-ordination and cooperation we can solve our common problems,” Schoeman said.
Once a comprehensive fibre network had been established across the main metropolitan areas of the country, Schoeman foresees further opportunities for his company that would be natural evolutions of the technology. Security and energy are two undeveloped areas, and a CCTV network in Johannesburg and a rooftop solar industry connected to the fibre network were two potential future projects.
“South Africa has a tremendous amount of opportunity for entrepreneurs,” Schoeman concluded. “The country has an interesting mix of first and third-world problems, which means individuals can leverage themselves and their companies here to make an actual difference.”