Taking wireless broadband connections to Africa

Communication Solutions (Comsol), in partnership with one of its shareholders, Convergence Partners, has taken a decision to build a portfolio of wireless broadband data operations across multiple countries in Africa, forming a new investment company known as Convergence Wireless Networks (CWN) specifically for this purpose.

CWN will investigate opportunities to secure spectrum/licences in high economic growth areas in Africa, with a view to participating in the roll-out of networks - as a strategic, minority financial investor - in those markets.

Convergence Partners has a majority equity stake of 75% in CWN and Comsol holds the remaining 25%, and both companies already have plenty of experience in the various African markets that CWN will be targeting.

Convergence Partners - an investment firm headed up by Andile Ngcaba, the former Director-General of the SA Department of Communications - is betting on the emerging business of WiMax as a high growth area over the coming years.

While there are operators the world over who seem hesitant to take the plunge into launching WiMax services, the benefits of this technology for a continent struggling to overcome the digital divide are numerous, including:

* Improved capacity
* Reduced data rates
* Wider coverage
* Lower infrastructure costs
* Better opportunity for multicast and broadcast services
* Solution convergence on the IP platform

"WiMax is set to take off, and it is already attracting attention from operators as a critical component of their future network plans," says research director Envir Fraser in a recent Convergence Partners report on the state of WiMax in Africa.

The company has already raised R200 million in funding that will allow it to conclude transactions worth R4 billion in Africa and the Middle East, as it will use a portion of the R200 million to invest in new transactions and the refinancing of existing transaction structures.

Add to this the fact that it plans to take a reported 12.5% stake, worth $37.5 million, in the 15 000km Seacom undersea cable and there is no doubt that its impact on African broadband in the near future could be nothing short of impressive.

Convergence Partners is an empowered investment company focused on the telecommunications, media and technology sector, predominantly in Africa and the Middle East.

The company's investment philosophy is to take meaningful equity stakes in quality projects and businesses within its chosen sector and act as an active, strategic value-adding investor.

As a major part of its strategy, it focuses on Greenfields projects that improve access to communications, broadband services and technology offerings throughout Africa and thereby contribute to enhance standards of living.

Comsol was founded in Durban in 1998 as its CEO, Iain Stevenson, was firm in the belief that wireless technologies can help the continent to leapfrog many of the legacy issues facing developed nations, and thus play a pivotal role in the African networking environment. The dominant sources of Comsol's business in the African market are: Large organisations, with operations dispersed over wide areas, that require sophisticated backbone links for telecoms connectivity between geographically spread locations (particularly in areas with limited wired infrastructure, including certain African countries), as well as organisations that require access to an ISP for Internet connectivity.

Comsol has a team of experienced, highly skilled and vendor-certified RF technicians, who install and commission networks throughout sub-Saharan Africa, and due to an ever-increasing share of the sub-Saharan wireless infrastructure market, as well as an increased demand for the company to provide large network deployments, it is already in a position to build large scale networks on a 'build to own' basis.

The company has already rolled out substantial networks at many mines in both South Africa and a number of other African countries, and plans to leverage this expertise as it helps CWN to take African infrastructure to the next level.

Comsol brings a wealth of experience to the joint venture, having been involved in the deployment of wireless broadband networks in many areas in sub-Saharan Africa, including a complex project for the Equinox Mine in Zambia.

This particular deployment required a wireless broadband network that could enable all voice, data and video communications for the mine; WiMax was considered because it not only provides ease of use, but also offers far greater distances between base stations than is available through regular wireless transmissions.

Also in Zambia, Comsol has worked closely with the Gates Foundation, which provided the funding to roll out and deploy a city-wide data network that included eight base stations and 50 clinic sites, as well as WiFi access points throughout the capital city of Lusaka. The project was initiated on behalf of the Centre for Infectious Disease Research.

Apart from these particular headline projects, the company has also committed to a variety of other projects in Lesotho, Tanzania and Swaziland, utilising a simple formula of remaining a specialist in wireless technologies, which in turn ensures it holds a large and highly specialised technical force in this specific area.

"WiMax is an ideal solution for Africa as it has limited cable infrastructure and is also much cheaper and time-effective to roll out. This enables our clients to have minimal down-time and maximum cost efficiency," says Stevenson.

According to Brandon Doyle, MD of Convergence Partners, CWN has identified countries in Africa that offer the best growth potential for wireless broadband networks on the basis of economic status, political stability, key communication statistics, size of the market, spectrum allocation, regulatory framework and licence award processes, existing operators and availability of financing.

"CWN will work in conjunction with local country partners and existing players either in the technology arena or existing network operators. Wireless broadband technologies offer significant advantages for the African continent, including equipment that is suitable for harsh weather conditions, standards-based WiMax technology, which demonstrates performance in excess of that of current 3G offerings, the networks are relatively inexpensive and easy to deploy and it offers far greater accessibility to regions that lack physical infrastructure," he says.

Stevenson claims that Comsol will design the appropriate networks for the local conditions and provide all the wireless infrastructure and ongoing network maintenance on all deals concluded, while Convergence Partners will be responsible for identifying suitable investment opportunities in African territories offering the strongest growth potential for wireless broadband services, which could be either start-up wireless networks or existing licence holders.

"It will also identify potential equity partners for the investments and assist these companies with implementation of their expansion plans, including with funding and joint development of business plans," states Stevenson, adding that the company is currently evaluating various potential opportunities.

"The potential for growth in wireless broadband usage across the continent is massive, given the low existing base of penetration, which can be highlighted by the fact that the total number of broadband connections across Africa at present is less than three million, and of these, the majority are actually 3G connections."