Today (25 August), Project Isizwe founder Alan Knott-Craig Jr announced the imminent commercial launch of HeroTel, a new Wireless Internet provider. HeroTel will aim to provide fast, reliable 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 R700 million, according to HeroTel. Consequently, wireless broadband connections continue to grow at twice the rate of fixed lines, highlighting a fast-growing market segment within an already booming industry. To that end, HeroTel plans to consolidate the WISP industry in order to provide a single national wireless broadband provider.  

Economies of scale

“South Africans need fast, reliable and affordable broadband and are increasingly looking for an alternative to ADSL,” said Knott-Craig. He adds, “WISPs already satisfy 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 high capex, centralised control, proprietary technology for network roll-out. “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", Knott-Craig notes.

Launch window

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", says Knott-Craig.