Cybersmart is flexing its muscles as an emerging telecommunications company by negotiating with the big players to land international bandwidth directly in Cape Town.
It is also entering the WiFi hotspot space, by buying a stake in Skyrove.
Cybersmart, a Cape Town-based Internet service provider that has operations in Durban and Johannesburg, has been reselling Telkom's ADSL offerings for a number of years and has 20 000 customers on its books.
“We have had to be fairly quiet about our business over the past 10 years or so, because we have been totally outgunned by many of the bigger players,” says Laurie Fialkov, one of Cybersmart's directors.
“However, now that we have an I-ECNS [individual network communications network service] licence, we have the same rights and abilities as the incumbents, and can build and operate a national network.”
Fialkov says Cybersmart is in negotiations with incumbent operators to lower the cost of bandwidth in the Mother City. This major economic area has not directly benefitted from the landing of the Seacom east African coast undersea cable, in Mtunzini.
“The major problem that we are facing is how does a small to medium-sized telco get the benefits of the lower cost caused by that increased competition and ensure there is adequate redundancy, so we can ensure a national network is viable?” Fialkov says.
Cybersmart's Durban operation, SA Online (SAOL.com), has built up a client base there and is becoming known in Johannesburg.
Fialkov says Cybersmart has entered negotiations with the Neotel and Telkom. It is also considering its options with the advent of the West African Cable System, which is supposed to land near Cape Town in 2011.
He says another advantage of the recent deal with WiFi hotspot provider Skyrove is that it is a product that can be rapidly deployed without depending on a third party.
“Skyrove is agnostic in its deployment of its systems and the model is one of revenue sharing with the clients. With the ADSL product, we are dependent first on our marketing, and then the ability and willingness of another party to install it,” Fialkov says.
Henk Kleynhans, Skyrove CEO and founder, says the deal with Cybersmart is structured over two years and based on a Skyrove valuation of R12 million.
“The final value and stake that Cybersmart will eventually get depends on various targets and warranties being met, so we cannot yet say just what the final cost of the deal will be,” he says.
Both Kleynhans and Fialkov say the deal shows consolidation is beginning to happen in the market, especially among the smaller players.
“I would rather call it convergence,” Kleynhans notes.
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