For a better connection

We’re definitely starting to eat some of the incumbents’ cake,” says Vox Telecom CEO Jacques du Toit, sitting across the table in the company’s head office. “We have an agile approach, whereas the incumbents can’t move that quickly.”

Du Toit looks pleased with himself, perhaps smug in the knowledge that Vox Telecom’s shareholders have just backed him with a R550m war chest to make further inroads into the telecoms and IT markets.

The company’s key priorities? Rolling out fibre and almost doubling its sales force.

Du Toit is also proud that Vox Telecom was recently recognised as having the highest achieved broadband speed in the South African market, after tests by activist website MyBroadband. The achieved speed was 907?456 kbps.

In January 2013, co-CEOs of Vox Telecom, Douglas Reed and Angus MacRobert, stepped down and Vox Orion CEO Jacques du Toit took the reins. At the time Reed said that Du Toit’s energy, dynamism, attention to detail and overall management skills would stand him in good stead. Du Toit says he sold his first cellphone in April 1994, through a part-time job selling phones as a freelance agent, while he was still at the University of Pretoria (Tuks).

Clearly an early adopter, he has been in the telecoms space ever since.

After leaving Tuks, he joined Aztec Communications, jumped to Orion Cellular and later Orion Telecom, which would eventually be bought out by DataPro, and become Vox Telecom.

A year after Du Toit took the reins at Vox Telecoms, its shareholders RMB, Metier and Investec, decided to sell the company.

It was decision investors ultimately did not follow through with and led to Vox’s new strategy four years ago to vertically integrate the company, which would require investment into the company’s infrastructure. At the time Vox Telecom realised that if it was going to really compete it was going to have to combine its telco and internet service provider businesses, explains Du Toit. 
“If you don’t own multiple pieces of the infrastructure value chain, then you have no control over underlying costs,” he explains. In line with this new approach, two years ago the Vox Telecom board approved the company’s new fibre strategy.

Extending connections

The first part of the strategy was purchasing Frogfoot Networks in July 2015, which would give Vox a footprint in the fibre-to-home and fibre-to-business markets. At the time Frogfoot had about 40 staff members and an extensive fibre footprint in Cape Town, serving both business and home users. It had only just begun rolling out in Johannesburg and Durban.

“People questioned why we bought such a small business,” says Du Toit. “We wanted to get our toe in the water, have a look and see how we could compete with the giants.”

Two years later and Vox has 300 coverage areas in the country, with coverage extended to a 3km radius from the drop-off point. According to Du Toit, Telkom is the largest player in
the market, having passed close to 200?000 homes. He points out that houses passed represent potential customers, whereas houses connected represent existing customers.

Vumatel claims to have passed between 80 000 and 90 000, which includes the network gained through the most recent acquisition of Fibrehoods. According to Du Toit, Vumatel plans to pass close to 200 000 by the end of 2017.

All other providers in the market, including Vox-owned subsidiary Frogfoot Networks, probably make up approximately another 20 000 to 40 000 homes passed, says Du Toit, with Frogfoot Networks targeting a further 56 000 homes by the end of 2018.

He explains that an identified precinct needs a take-up of between 30% and 40% to become feasible – in some of Vox’s precincts, take-up is as high as 70%, with more than 50% of these customers also using Vox ISP services.

A service for all

A key differentiator in the Vox strategy is its focus on a regional approach. If you were to leave Johannesburg on the N12 heading east into Mpumalanga, and then joined the N11 heading southeast, before joining the N2 and heading into Northern KwaZulu-Natal, you would be tracing a rough arc of proposed expansion by Vox Telecom’s subsidiary Frogfoot Networks.

This arc includes eMalahleni, Middelberg, Secunda, Ermelo, Piet Retief, Empangeni, Richard’s Bay and Balito, among others.

Vox announced its plans for the national long-distance fibre network in October last year, insisting that fibre will only be feasible in eMalahleni, Middelburg, Empangeni, and Richards Bay, for now.

“Everyone is focused on the big cities, Johannesburg, Cape Town and Durban,” says Du Toit.

“As far as we are concerned Richard’s Bay is low-hanging fruit, with all the industry and the port, while Empangeni has a lot of mining and manufacturing,” he adds.

Of Frogfoot’s network arc, Du Toit says that while Vox was conducting market studies, it noticed that there are some decently sized small towns in this arc that had no chance of getting fibre. Instead, a number of wireless internet service providers, who were aggregating ADSL services to build a network, were servicing these communities. “We convinced them to do away with the ADSL service and take a fibre line from us,” explains Du Toit.After speaking to some of the residents in these towns, it became clear to Vox that their internet services are limited to basic browsing and social media – live streaming video not being an option. To address this, Vox will deploy wireless links via a high-capacity backhaul and change the connectivity experience in these towns for the better, he says.

This article originally appeared in the 11 May edition of finweekBuy and download the magazine here.

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