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    Home » In-depth » New WBS investors not in for an easy ride

    New WBS investors not in for an easy ride

    By Duncan McLeod25 September 2016
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    Tim Parle
    Tim Parle

    Former top bankers Michael Jordaan and Paul Harris could steal a march on South Africa’s established mobile telecommunications operators when they launch their new national wireless broadband network early next year thanks to their access to highly prized spectrum assets. But it’s not going to be an easy ride.

    That’s the view of industry expert Tim Parle, who is senior telecoms consultant at ICT research and consulting firm BMI-TechKnowledge. Parle said this week that the plan to retool iBurst parent company Wireless Business Solutions (WBS) as an urban 4G/LTE-Advanced operator makes sense. It is well-placed to use “carrier aggregation” technology (effectively, the pooling of radio frequency spectrum bands), for example, to offer speedy broadband to consumers.

    Multisource, a company backed by Harris, Jordaan and other investors, acquired WBS last year for an undisclosed sum. The company this week revealed its plans to build an LTE-Advanced network, at a cost of billions of rand (using a mixture of debt and equity already secured), to take on the incumbent mobile providers.

    However, the incumbents won’t sit back and watch the newcomer eat their lunch, Parle said. The new network will have to box clever to succeed.

    WBS, which owns the consumer-focused Internet provider iBurst and the business telecoms company Broadlink, has had designs on building an LTE network for a number of years, but has lacked the funding to do it. The new investors said this week that by skipping 2G and 3G, and going straight to 4.5G (LTE-A) technology, WBS will have the advantage of not having to invest in legacy infrastructure. The new network, which must still be given a name, will be deployed on some of WBS’s own 400 high sites as well as sites leased from tower companies and other telecoms providers.

    A “limited number” of LTE-A sites are already in operation and 30 000 existing iBurst customers will be converted to the new network, with national roll-out commencing in the next few months. The focus initially will be on Johannesburg and Cape Town, with commercial services likely to be launched in early 2017.

    Jordaan, who stepped down as First National Bank CEO in 2014 to pursue technology investment opportunities, said this week that WBS’s initial focus will be on fixed-wireless (in-home) services, rather than on mobility. However, in time this could be expanded to mobile in a few years, once smartphones are generally available that support its network. “We hope to get to 10 000 sites over five years.”

    He denied that the investors are hoping to build the network in order to sell it to one of the big mobile operators. “This is a long-term game for us,” he said.

    BMI-T’s Parle said there is an opportunity for a new, data-led wireless broadband network in South Africa. But the market will be “fiercely fought for” and Multisource and WBS need to be “very targeted with their planning, marketing and client acquisition to take significant market share”.

    Michael Jordaan
    Michael Jordaan

    “Through the acquisition of WBS, Multisource has gained access to a rich set of frequencies,” said Parle. “Its assignment in the 1,8GHz band – the most widely used band globally [for LTE] – gives it the same amount of spectrum as Vodacom, MTN, Telkom, Cell and Neotel. As things stand, Multisource is the only company in South Africa with an assignment in the 2,6GHz band – the second most widely used band for LTE globally.”

    Parle said WBS has a “slight advantage” if it can use carrier aggregation. “This is, however, subject to the market developing devices that use their particular set of frequencies and protocols.”

    Its biggest challenge may be overcoming the head-start of rival players. Vodacom and MTN already have more than 6 000 LTE base stations each, Telkom has around 1 500, and Neotel and Cell C are building LTE networks, too.

    “Neotel has similar spectrum assets to Multisource, and Liquid Telecom [which recently acquired the company] will certainly capitalise on these,” he said. Add to this new players such as Comsol and BitCo, as well as other emerging wireless Internet service providers, and it’s clear that the market is quickly getting crowded.

    There is an opportunity in the business market for WBS, too, Parle said, where companies are “hungry for a credible replacement for the Telkom Diginet Plus service, which has been the mainstay of business communications in South Africa since the 1990s”.

    “There will be a sweet spot for business services in the 2-10Mit/s range, which can be delivered wirelessly where fibre is not available or cannot be justified. Multisource can tackle this with LTE-A and point-to-multipoint services as an extension to Broadlink’s Metronet services and brand.”

    • This article was also published in the Sunday Times


    BMI-T BMI-TechKnowledge Broadlink iBurst Michael Jordaan Multisource Paul Harris Tim Parle WBS Wireless Business Solutions
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