South African fibre veterans launch United States expansion plan
One of South Africa’s major fibre broadband industry players has partnered with a group of investors to make a move on the American market.
Myriad Capital is spearheading the push, with veterans like Afrihost co-founder Peter Meintjes and former Conduct Telecommunications shareholder and DFA sales head Dimitri Moussa involved.
Myriad’s companies in South Africa include Reflex Solutions, Evotel, Link Layer, and Metrowatt.
Although Myriad may not necessarily be a household name, its subsidiaries provide critical services to South Africa’s fibre network operators.
This includes providing optical line terminals, points of presence, core network infrastructure, network operations centres, and security centres.
Myriad says that, all told, it provides services to 70% of the fibre market outside of Telkom’s wholesale and networks division, Openserve.
Speaking to MyBroadband about their plans for the United States, Myriad Capital founder and CEO Greg Wilson (pictured) said they see an opportunity to help disrupt the telecommunications landscape in the country.
Wilson explained that US operators have had little incentive to roll out fibre widely because existing cable broadband technologies still offer good speeds.
Some old copper-based coaxial cable-based networks even support up to gigabit-per-second speeds, albeit with much slower (20Mbps) upload speeds than fibre can offer.
The US also doesn’t struggle with copper cable theft like South Africa.
“It meant they haven’t had this urgent need to go to fibre. They’re actually far behind the South African market,” Wilson said.
This raises an obvious question — if there is no burning desire from ISPs or users to switch, what can Myriad offer the American market with fibre that it doesn’t already have?
“You can’t rely on the fact that people will want to move because the technology experience is [as bad as we had it in South Africa before fibre],” Wilson said.
Wilson explained that the United States has far less consumer protection than South Africa.
“For example, you’ll see the sticker price saying $50 for an unlimited service — and then you look at the fine print, and there’s another $10 billing charge, and another $10 mandatory router charge,” he said.
“The $50 service is actually $70 — and capped at 100GB.”
The US’s incumbent broadband providers are also infamous for poor customer service.
As a result, American consumers often intensely dislike their broadband provider.
Wilson said they believe this has created a gap in the market for upstarts like them.
“We have to rely more on the overall service experience, focusing on four fundamentals: pricing, honesty with our consumers, uptime, and quality of the Wi-Fi.”
Taking on the big guns
However, Myriad is not the only company to have this idea.
One of its competitors is Google, which has launched fibre projects in several US cities.
Asked what they could do that Google can’t, Wilson was diplomatic. He said the challenge with rolling out fibre was that it remains a series of infrastructure projects.
“It’s not really a technology play. It’s how well you run these construction projects,” he said.
“Every market and every city has its nuances — and every community has its own sensitivities.”
He gave the example that a community might strongly oppose aerial fibre because they’re busy driving a beautification project.
“Unless you’ve got the agility to deal with those problems on the ground, you can’t just wave a magic wand — even if you have the biggest chequebook in the world — to roll out infrastructure,” said Wilson.
“You need local players to go and solve local problems. I think that’s what gives the gap for smaller players to come in and take a slice of the market.”
Google is not the only massive multinational media company Myriad will compete against.
Myriad will be up against Comcast, Verizon, AT&T, and Charter. What stops them from reaching into their deep pockets and out-investing smaller players?
“If you look back on the history of how these big companies were formed, they didn’t actually go out and roll out the whole of the US with cable. It was a consolidation of lots of smaller players,” Wilson said.
“The institutional knowledge in terms of how to actually go and roll out an infrastructure project at that scale doesn’t really exist.”
Wilson believes the fibre market in the US will evolve in much the same way, with smaller, regional players consolidating into ever-larger network operators.
“It might change who the key players are. The big players today might not be the big players in ten years,” he said.
Asked whether he’s building towards a big buy-out like that, Wilson said it was too early to tell.
“I’m an entrepreneur at heart. I love building businesses. [But] as I get a little bit older, I’m going to have to make decisions: when is it time for me to recycle capital and start something new, and when is it time to sort-of lock in and keep an investment long-term,” he said.
“This may be one of the ones where I decide to stay in long-term. I like the space; it’s quite well-protected against economic turmoil. People will always need their broadband, and fibre is a secure technology.”
Regarding whether the investment is also an excuse to emigrate, Wilson said that while he would probably have to go over to manage the investment for a few years, he doesn’t want to leave South Africa.
“I certainly don’t have a desire to leave South Africa. I love South Africa. I’ve really got an amazing lifestyle here,” he said.
“But I think with the size of the investment we’re making, it’s quite conceivable that I’d have to go over quite soon and manage that investment — even if it’s just for a few years. Then I can take stock of my life and decide where I want to be.”
Open Fiber’s deals in North Carolina
Myriad’s expansion plan
Wilson declined to reveal the value of the investment and explained that the shareholding structure fluctuates daily.
“We raised a hedge fund to fund the project, and depending on how much of the money gets used, the shareholding structures change.”
Wilson is personally invested in the venture with 100–120 others, including many South African family-office investment vehicles.
“Almost all the initial seed capital came out of South Africa. It was very well supported by family offices,” he said.
Myriad has invested in two separate businesses rolling out fibre in the US — Open Fiber and HyperFiber.
Open Fiber launched in North Carolina and is expanding into two more states.
HyberFiber focused on Arkansas and Florida, with additional states in their sights for future expansion.
Wilson said they’re looking at rolling out throughout the Southeastern United States, concentrically from where their businesses currently operate.
This includes South Carolina, Georgia, and Tennessee.
As they expand further, they could also target Texas.
“In Texas alone, there are over 5 million households without fibre,” Wilson said.
Loading ...