Internet service provider (ISP) UUNet says it will grow its new business at a 45% compounded growth rate over the next three to four years despite the uncertainty surrounding its troubled parent, WorldCom.
Along with other ISPs and telecommunications companies, UUNet is readying for the appearance of the second national telephone operator, which will open up the telecommunications sector to serious competition.
"Turnover for the African group (which includes operations in SA and Botswana) should pass R640 million in the current financial year," says UUNet MD David Meintjies. However, he would not elaborate on the numbers.
Most of UUNet`s SA business is centred on 2 500 corporate clients. It has a few thousand mobile subscribers in Botswana plus a number of individual subscribers in this country.
The ISP has been surrounded by speculation and has been unwittingly drawn into controversy since revelations that its parent, WorldCom, had inappropriately accounted for about $4 billion and then filed for Chapter 11 bankruptcy protection - the largest in US history. But UUNet is continuing with an aggressive branding operation.
"We still use the WorldCom branding in our advertisements because it has always been there and there is no use in hoodwinking people about our connection," Meintjies says. "We are not dependent on WorldCom for cash, but we are still part of the group."
WorldCom has until 21 November to come up with a plan to restructure its outstanding debts and then its protection from creditors will fall away. Its former chief financial officer, Scott Sullivan, was indicted yesterday in front of a US Federal Grand Jury on securities fraud and other charges.
Meintjies says the growth in demand for Internet and telecommunications services in Africa should continue at a higher pace than in most other parts of the world.
"Africa is a different case than most of the world where there is an oversupply of telecommunications services and products. Another main difference is that the digital divide in Africa is more of an economic issue than a technical issue," he says.
The South African telecommunications industry is due to go through interesting times as state-owned utility Telkom prepares for an initial public offering during the early part of next year. Once this is completed, the second national operator (SNO) will be given a licence and will enter the market.
"The SNO will have two options to approach the market. Firstly, it could go directly to market or it could approach the market through the industry channel. I believe the latter will be the case," Meintjies says.
He says the emergence of the SNO will not only help consumers, but will also increase the product range being offered, allowing greater access to sales and marketing opportunities. "With the channel to market strategy, the SNO and the channel will each be able to play to its own strengths without having to play to regulation as is now the case."
Meintjies says he has noticed an uptick in Telkom`s marketing and sales activity recently, which could be interpreted as a sign that it wants to grab as large a market share before the SNO is established.
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