SA’s mobile operators are unlikely to provide Dimension Data division Internet Solutions (IS) with the contracts necessary for it to become a cellular service provider.
This leaves it with two options, says CEO Angus MacRobert: become a dealer, working through independent service providers such as Altech Autopage Cellular and Nashua Mobile, or buy a cellular service provider.
MacRobert has said previously that IS has plans either to become a mobile virtual network operator (MVNO) or a “super cellular reseller” in the mould of an Altech Autopage Cellular or Nashua Mobile.
IS has already decided not to go the MVNO route as “there is not enough margin in it”, MacRobert says.
But now industry players say the mobile operators are unlikely to want to allow another service provider to enter the market as they are already trying to consolidate the number of independent providers in the market.
Both Vodacom and MTN have been buying out independent service providers in recent years so they can serve customers directly.
Where does that leave IS?
MacRobert admits IS has been given informal feedback from the network operators that they will be unwilling sign the necessary agreements.
An acquisition also seems unlikely. Both Altech, which owns Autopage Cellular, and Reunert, which owns Nashua Mobile, are unlikely to want to sell their service provider businesses. Both companies are cash cows and are also likely to be worth many billions of rand each.
And there is a dearth of smaller players in the market. VoxOrion is understood to have a reseller agreement with MTN, but IS is unlikely to want to buy VoxOrion, or, indeed, parent company Vox Telecom, given the uncertainty over the impact that lower mobile interconnect rates will have on companies that provide least-cost routing (LCR) services.
LCR is a big component on VoxOrion’s Business. If interconnect rates — the rates operators charge one another to carry calls from each other’s networks — fall sharply, it could have an adverse effect on LCR providers.
The only other option for IS, then, is to become a dealer, working through service providers. “We don’t really have any other choice,” MacRobert says.
He insists this is not a problem, though, especially since IS is not planning to pursue the mass consumer market, but rather to use mobile to complement its offerings in the corporate space. — Duncan McLeod, TechCentral