HeroTel will provide wireless broadband at affordable rates to households and small businesses.
Over the last 13 years the lack of reliable fixed line options has birthed a thriving industry of over 200 wireless Internet service providers (WISPs) with estimated combined annual revenues of R700million.
Wireless broadband connections continue to grow at twice the rate of fixed lines, highlighting a fast-growing market segment within an already booming industry.
HeroTel plans to consolidate the WISP industry in order to provide a single national wireless broadband provider.
“South Africans need fast, reliable and affordable broadband and are increasingly looking for an alternative to ADSL,” said Knott-Craig. “WISPs already satsify this craving with net profit margins reaching as high as 40%. However, due to the fragmented nature of the industry the WISPs suffer from lack of coordination. HeroTel plans to consolidate the disparate regional wireless broadband providers under a national brand and unlocked the economies of scale.”
According to Knott-Craig, HeroTel will differ from a traditional data network provider, which employs the age-old methodology for network roll-out: high capex, centralised control, proprietary technology.
“The old ways only make sense when the operator can generate revenue from high-margin voice calls. Pure-play data networks do not have the luxury of selling minutes, which is why today’s data networks continue to struggle to provide a suitable return on capital for investors.
“The truth is that consumers want faster speeds and lower prices every year. Instead of fighting that demand, WISPs have figured out a way to deliver the goods whilst making a profit. HeroTel has taken the lessons learnt by WISPs to reduce the cost of deploying and operating a telecoms network to a point where it is profitable to provide fast, reliable, affordable broadband to the public.”
HeroTel was formed following the acquisition of Snowball, based in Stellenbosch, and Cloud Connect, based in George, and is funded by an investor consortium including former First National Bank, CEO Michael Jordaan, former Rand Merchant Bank, CEO Mike Pfaff and CIO (Chief Investment Officer) Derek Prout-Jones.
“We are currently integrating our WISPs under a unified network and brand and are scheduled to officially launch HeroTel for consumers on 1 April 2016.”
Knott-Craig will take on the role of Executive Chairman, supported by CEO Corne de Villiers, COO Francois Wessels, CIO (Chief Information Officer) Imel Rautenbach, and CFO Van Zyl Botha. Alan remains CEO of Project Isizwe, a non-profit company which he founded in 2013 that provides free WiFi to poor communities.
Prof John Volmink, chairman of the board of Isizwe confirmed that the board has approved Knott-Craig taking on the role of Chairman of HeroTel and is excited for the benefits that will accrue to Isizwe thanks to a strong commercial partner.
“HeroTel is not about building a telco from scratch. It’s about consolidating an existing network of hundreds of wireless broadband entrepreneurs and aligning them with a greater mission: Making it easy to get fast, reliable, affordable broadband.” says Knott-Craig.