Liquid Telecom challenges monopolies

Liquid Telecom is $200 million through a $400 million-plus project to build the first extensive regional and international optical fibre network in Southern Africa.

The company — majority owned by Zimbabwean mobile operator Econet — has already built 8 500km of cable linking towns and cities in four countries,and will soon reach another three countries, says CEO Nic Rudnick.

The project started because of the number of submarine cables that have been laid along the coast of Africa in the past couple of years.

That has driven demand for the connections to be extended from the coastal landing stations inland.

“In 2009 we saw all the fibre around the coast and a complete dearth inland,” says Rudnick, a former lawyer who has worked for the Econet group for 13 years.

Some companies were building short links to the main cities “but in bits and pieces”, he says. “There was no regional network with full redundancy.”

Econet charged its wholesale operation, Liquid Telecom, with the task of building a ring-based fibre network that would not duplicate existing fibres — laid by companies such as rival South African operators Telkom and Neotel, for example — but would extend regional services throughout Southern Africa.

“We want to cover minor cities and towns on the way,” says Rudnick. “Our market is to build where there is no fibre.”

With commercial operations well established, the CEO is finding the demand for services within the region is greater than demand for connections to the world outside.

“Financial institutions want us to connect their branches, and so do supermarket chains,” he says. Companies and Internet service providers are “a significant growth area” for Liquid Telecom, which is 60% owned by Econet.

“We run from northern South Africa through Zimbabwe to Zambia to the Democratic Republic of Congo,” says Rudnick. “Next year we will build to Botswana as a co-build.” He won’t name the company he’s partnering with on that link: “They’re sensitive.”

The Liquid Telecom route diagram shows the company plans to reach Lesotho, a country completely surrounded by South African territory, and has planned links towards Namibia in the west and Mozambique in the east.

“We’re not sure of the length (of the complete build) because we’re still modelling the routes.” The total construction will increase the length of the existing network “by 50 to 60% or more over the next couple of years”. That will put the total route length at something like 13 500km.

The company has further aspirations, to link with similar networks in East Africa. Conversations are continuing that should lead to networks working together to cover Central, Southern and East Africa, but the physical connections have not yet been made “because our fibres haven’t quite got to the point where we can meet up”, says Rudnick.

It has been — and continues to be — a huge construction project for Liquid Telecom. More than 95% of the network runs along roads, with the fibres in red, yellow or green ducts buried a metre below the surface and often protected with concrete to stop rats chewing up the plastic. “Large rats burrow down.

We’re also getting rat-repellent ducts,” he says. “We’re building this all to international standards, with electronically lockable manholes at 500m intervals. It’s one of the biggest construction projects in Central Africa in the last few years.”

The fibre in the ducts “have more capacity than we will ever need”, but Liquid Telecom has the ability to put in extra fibre if necessary.

A bigger challenge for Rudnick and his team has been getting licences and wayleaves along the route, not just from national regulators, but from local authorities, some of which “won’t give wayleaves at all”, he says.

“It takes an inordinate amount of persuasion and sometimes takes years.”

The problem is officials are used to the era when telecom networks were run by a state-run company or a government department, which never asked for permission to install cables and they have had difficulty accommodating to today’s competitive era.

But that’s a field where Rudnick shines. Before he was in the telecoms industry he was a Zimbabwean lawyer acting on behalf of Econet and its owner, Strive Masiyiwa, who were trying to get a mobile licence to compete against the State-run operator.

The struggle went to law, challenging President Robert Mugabe’s government, “the longest running case in Zimbabwe”, he recalls.

“We were the first to take on the system and win. In the end, the supreme court gave Econet its licence.” Today Econet has 70% of the Zimbabwean mobile market.

After the case was won, Rudnick joined Econet to become its in-house legal executive, but “now I do very little law and a great deal of telecoms”.

The experience has helped him and Liquid Telecom challenge people “who have a fondness for State monopolies”, he says. “I spend my time fighting against monopolistic tendencies, either in law or in people’s minds.”

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