When the telecommunications industry started talking deregulation early in 2002, Dumisani Nkala saw a big opportunity looming on the horizon. “The law was set to change and we knew that when it did and the telecommunications industry started deregulating, substantial opportunities would arise,” she explains. She and her father, who has 30 years of experience heading up a telecommunications company in Zimbabwe, setup Zinandi Communications with a view to taking advantage of such opportunities.
“Our end-goal was based on a model we had observed, mainly in the United Kingdom, which had a very similar regulatory market to South Africa’s, and which then deregulated. For a short time we had a telecommunications company in the UK and we knew that a host of opportunities opened up for new telecommunications entrants following deregulation, focusing mainly on Voice Over IP (VoIP) as the key technology used for offering internet-based services, ” explains Nkala. She’d learned from past experience how critical it was to grasp these opportunities early.
“In our UK business, we only enjoyed limited success and this is because we came into the market at the tail-end of deregulation. We knew that having a good lead team and getting your foot in the door early provides an enormous advantage to new entrants to the market. It makes a significant difference to your ability to be successful.” So, Nkala set up Zinandi Communications well before the opportunities were realised.
“We had to wait for the environment to become optimal, both in terms of licensing and regulations. When we started, the industry still had to deregulate, but we knew it was coming and we also understood the importance of getting ourselves into position early on.” Nkala adds that the first big challenge for the business was securing interconnection with major industry players such as Telkom, MTN and Vodacom.
Although regulatory body ICASA ruled in 2002 that existing players with 25% market share and above had to interconnect when asked to do so, the big industry players dragged their feet and it took well over a year before Zinandi had secured interconnection contracts with Telkom and Vodacom. “It was a very long and arduous process but because we’d been thinking and planning for so long, as soon as interconnection was mandated, we could make our approaches to the big players,” explains Nkala. While the business waited for the wheels of the law to slowly grind into place,she set up and ran an internet café.
Interconnection in place, Zinandi started offering services to Telkom and Vodacom users who registered on its network, allowing them to call international destinations at the cost of a local call, and generating revenue for the business from an interconnect rebate rate.“Traditionally, international calls in this country have been hugely inflated, so offering international calls at a lower rate gives us a price advantage,”says Nkala. But she quickly adds that she knows this advantage won’t always be there, and as such she already has her eyes on new innovations and service offerings that will help Zinandi retain a competitive edge. “One of our core competencies is developing solutions and we’re continually looking to developnew products that the market will find interesting,” she says.
Gearing the business over the next few years is going to take a considerable capital injection, and although telecommunications is an attractive investment opportunity, it only yields really big returns after seven years. “We have a phased growth plan for the business that includes raising substantial capital and have already had promising conversations with a few potential investors,” Nkala explains. But she’s confident that when the platform goes live, it will attract interest not only from new customers but also from investors. Contact: + 27 11 884 1037; +27 87 830 0012; email@example.com