Vodacom opens up on iBurst

Johannesburg, 26 Feb 2008

Vodacom's investment in wireless broadband provider WBS was based on acquiring access to a multitude of services and not familial interests, says Vodacom group COO Pieter Uys.

The cellular giant's acquisition of a 10% stake in WBS - parent company of iBurst - has been the subject of much market speculation. This is because Vodacom group CEO Alan Knott-Craig is father to iBurst MD Alan Knott-Craig Jnr.

Vodacom is waiting for approval from competition authorities on its acquisition of a further 15.1% stake in the business.

Recused from talks

However, Uys has clarified that neither of the men were involved in the negotiations.

"Knott-Craig Snr declared his family ties to the Vodacom board and removed himself from the talks. His son was not involved at all as this deal was orchestrated at a WBS group level," he reveals.

The people who were involved in the negotiations were Uys; Shameel Joosub, MD of Vodacom SA; Thami Mtshali, WBS CEO; and various financial and legal representatives for WBS.

Uys explains Vodacom chose to enter discussions with the wireless operator because it would enable it to access a broader range of services.

"Our interest in WBS was and is not about the technology but about the services they have on hand. We want to access as broad a range of services as possible so that we in turn can provide for any requirements our customers have," he says.

Scratching backs

Vodacom is particularly interested in WBS's WiMax licence, as this is a technology the company intends to offer clients through its newly launched Vodacom Business division. Vodacom already offers iBurst's wireless broadband services to its clients.

As a result, Vodacom is financing the roll-out of iBurst's WiMax network.

Uys explains: "We have two agreements in place with iBurst. Through the first, we build the WiMax network on iBurst's behalf and WBS pays us back for that. The second is a service provider agreement that enables us to sell those services to our clients."

This roll-out is being approached in phases, with 120 sites planned for the first run. Each site costs almost R1 million, Uys reveals. However, the company expects to double this investment until a critical mass is achieved and new roll-outs can be demand-driven.

"The technology is really irrelevant. If you look at the mobile market, you see that 3G and HSDPA are evolving to fourth-generation services. In two years' time, things will be different again. Particularly in the business space, WiMax offers us a service that can get us into a niche aspect of the market," says Uys.

"Ultimately, WBS is a good company and we are keen to increase our investment," he concludes.