The men who took on Telkom and won

Niel Schoeman and Johan “Joe” Pretorius are the two masterminds behind South Africa’s biggest fibre-to-the-home (FTTH) network, Vumatel, which played a huge role in breaking Telkom’s fixed-line Internet monopoly.

The company’s unassuming launch in Parkhurst in 2014 marked the beginning of a radical change in South Africa’s broadband market.

Before Vumatel, a handful of telecom providers had only rolled out FTTH very selectively in new buildings and estates, some affluent areas where they believed it made financial sense, and as experiments.

At the time, then-state-controlled Telkom was the dominant fixed-line provider, with around a million DSL subscribers using its copper connections.

After years of exploitative pricing and poor service supported by what was effectively a legalised monopoly, the Competition Tribunal ordered Telkom to spin off its networks and wholesale businesses in July 2013.

That move aimed to improve competition and subscriber choice by forcing Telkom to treat third-party Internet service providers (ISPs) and its own retail business equally.

However, Telkom still controlled most of the country’s physical fixed-line infrastructure.

This network consisted of copper cabling, which had significant performance constraints and stability issues, in no small part due to its appeal to thieves.

Cellular networks were still only beginning 4G rollouts at the time, and mobile data was expensive, leaving customers looking for uncapped broadband stuck with Telkom.

Fibre was a faster, higher-capacity technology free of such caveats, but it was still unfamiliar to consumers.

Connecting homes with fibre in a visually appealing way would also require extensive digging and trenching — an expensive exercise.

Vumatel nonetheless proved there was a business case for the technology.

Its survey-based research proved there was sufficient demand and a willingness to pay for reliable connectivity in Parkhurst.

The Parkhurst Residents and Business Owners Association subsequently awarded Vumatel a tender to install FTTH in its neighbourhood, choosing the startup over established players.

Vumatel beat its rivals by guaranteeing a minimum speed of 4Mbps for every home — and without the much-loathed line rental for which Telkom had become infamous.

Higher-speed connections had line rentals, but these were much cheaper than the going rate for DSL.

Schoeman helping to break ground on the pivotal Vumatel FTTH project in Parkhurst in 2014

Pretorius has largely kept out of the public eye, but Schoeman shared some details about his personal, academic, and professional background during an interview with Startup Grind in November 2014.

Schoeman grew up and was schooled in Welkom and Bloemfontein in the Free State. His parents were both teachers and helped instil the importance of education in their son.

His years as an entrepreneur started while studying Industrial Engineering at Stellenbosh University, where he used money from study loans to invest in the stock market.

After obtaining his degree, he briefly worked in consultancy and the enterprise resource planning industries in South Africa before moving to the UK.

It was here where he co-founded the technology consultancy firm Birchman Group with Pretorius in 2003. Around five years later, the company had expanded to about ten countries.

Birchman Group helped Dark Fibre Africa (DFA) build one of the first private and independent terrestrial fibre networks in South Africa, used primarily for backhaul connectivity of LTE cellular towers.

The company was so successful that Schoeman could retire early upon his family’s return to South Africa in 2007, motivated by the birth of his first daughter.

At some point in the same year, Schoeman and Pretorius founded the company Conduct to connect businesses with fibre. DFA would later acquire conduct.

With the success of their business fibre venture, the duo shifted their attention to home coverage as their next natural focus area.

Vumatel was conceptualised by Schoeman and Pretorius over a few whiskies in Spain.

It was during that “meeting” the pair decided on the striking pink colour for the brand, which has made its rollout teams easy to recognise.

During an interview with ITWeb in 2015, Schoeman said Vumatel’s goal was to replace Telkom as the leading fixed-line operator and to make reliable fixed-Internet more affordable.

There is little denying that in the decade since its first rollout, Vumatel has largely realised this vision.

South Africa now has a healthy ecosystem of fibre network operators (FNOs) providing FTTH coverage to millions of households.

Vumatel reached a milestone of two million households coverage with FTTH in mid-2023, which is around double Telkom wholesale division Openserve’s latest homes passed figure.

That is despite Telkom having a significant head start in fixed-line network infrastructure.

The affluent market has become saturated and highly competitive with numerous other large and small FNOs.

Many of these players were encouraged by Vumatel’s successes to take part in the “land grab” for FTTH customers.

The 100Mbps for R100 dream

Vumatel’s next major focus is on aggressively expanding its reach in poorer communities that have often been left behind in terms of fixed connectivity due to financial feasibility.

Schoeman’s dream was to offer 100Mbps uncapped fibre for R89 per month.

“Abundance. At the price of two Big Macs,” he said at a presentation in 2017.

Vumatel was acquired by Johann Rupert’s Remgro in 2018, shortly after Schoeman stepped down as its CEO and became executive chairman.

Vumatel and DFA’s parent company, Maziv, and Vodacom are currently navigating a transaction where the mobile operator aims to acquire a 30% stake in the business.

The Competition Tribunal is currently scrutinising the details of the deal.

Schoeman said that one of the best things businessmen can do is ask customers for their advice.

“Rather than go and ask for a customer to buy something or to give you a chance, take your product as soon as possible, go to your potential customers and ask for their advice,” Schoeman said.

“They can give you good advice, they become invested in your product…if you start to satisfy some of those needs, the first customer that is going to buy is the customer that feels their input is part of that product.”

Schoeman said that it is important that businessmen choose the right partners.

His professional partnership with Pretorius has continued with the development of a digital currency called Toco, which derives its value from the amount of carbon removed from the Earth’s atmosphere.