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WBS sale presents market benefits

Bonnie Tubbs
By Bonnie Tubbs, ITWeb telecoms editor.
Johannesburg, 17 Oct 2014
Former FNB boss Michael Jordaan is a shareholder in Multisource, which is in talks to buy iBurst owner WBS.
Former FNB boss Michael Jordaan is a shareholder in Multisource, which is in talks to buy iBurst owner WBS.

The purchase of Wireless Business Solutions (WBS) by "under the radar" ICT company Multisource could pave the way for a stronger player in the market, at a time when consolidation is creating an ecosystem of fewer large Internet service providers (ISPs), rather than a multitude of smaller ones.

This is according to analysts and comes after Multisource, which calls itself a "next wave networks" provider, confirmed it is looking to acquire WBS, the parent company of consumer ISP iBurst and business ISP Broadlink.

Ex First National Bank CEO Michael Jordaan's investment vehicle Montegray Capital holds about 16% in Multisource. Other shareholders include Paul Harris, founder of First Rand Group; technologist and entrepreneur Brandon Leigh; and Multisource chairman Phumlani Moholi, former technology chief at MTN and the man behind delivering the technology for the 2010 Fifa World Cup.

Moholi and Jordaan, who confirmed the deal, say details surrounding it are at this stage strictly confidential.

Rumours that WBS was up for sale have been going for months, with some of the bigger players in the market believed to be eyeing the entity - but nothing has materialised until now. The Global Mobile Suppliers' Association (GSA) said earlier this year that an "operational tie-up" with the company in its quest to deploy long-term evolution (LTE) was possible.

Virtual networking

BMI-TechKnowledge (BMI-T) director Brian Neilson says the WBS/Multisource deal is an "interesting development" in light of the current consolidation in the market. "However, it does support the other concurrent trend, which is the growth in small, nimble ISP players, which are cherry-picking sweet spots in the market, some of which are doing quite well."

Multisource, which he notes has until now been "a bit under the radar", seems to be setting itself up as a virtual network enabler (VNE), after having acquired IP network company Neology in October 2013.

"A VNE operates underlying infrastructure (including core network elements) for ISPs that do not have their own infrastructure," explains Neilson. By extension, he says, Multisource could use iBurst's spectrum to deploy next-generation fixed or nomadic wireless services.

Multisource's Web site suggests a range of solutions, including Internet of things for enterprise and triple play for residential services. The company is also exploring TV white space with Microsoft. "They also mention fibre to the home, and could use iBurst's current wireless network as part of a phased strategy to bring both wireless and fibre service to residential areas and business parks," says Neilson.

BMI-T analyst Tim Parle says, up until recently, Multisource was largely known as a supplier of private mobile radio equipment. "[The company has] effectively rebranded, repositioned themselves in the telecoms supply chain, and launched themselves as an operator. The 'next wave networks' is a positioning approach - a slick approach to place them as a forward-thinking company and attempt to demonstrate thought leadership."

Business gains

Despite scepticism in the market around WBS' chances of success, analysts say there are clear benefits to be gained from a purchase of the company, which has spectrum in the 1 800MHz and 2.6GHz bands.

Africa Analysis analyst Dobek Pater says gains for Multisource would include WBS' existing infrastructure. "iBurst has a microwave network in place for last mile access and Broadlink has microwave infrastructure in place for access / metro / long-haul and it also uses some Dark Fibre Africa fibre for its backhaul links."

Spectrum and a customer base in both the enterprise and retail markets, says Pater, are two more benefits Multisource would get out of the deal.

"With consolidation beginning to take place and large operators active in the market in this regard, I think WBS presents a good option for Multisource if it wants to expand into infrastructure and more strongly into the ISP space. In other words, there is not that much left in the SA market that has not been already spoken for."

Parle says the real asset WBS presents lies in the 1 800MHz spectrum ? plus other bands where WBS has a holding. "The 1 800MHz allocation is the same size as Vodacom, MTN, Cell C, Telkom and Neotel have and is unused. 1 800MHz is one of the most popular bands globally for LTE devices (per the GSA). Over 42% of all LTE devices can operate in this spectrum. The other bands are used for licensed point-to-point and point-to-multipoint microwave access."

Per the GSA, the 1 800MHz (3GPP band 3) continues to be the most prominent band for LTE network deployments globally and also has the largest devices ecosystem with 944 user devices.

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