Cyril Ramaphosa helped revolutionise the Internet in South Africa

Years before returning to politics, Cyril Ramaphosa was part of a group of investors who helped Seacom bypass government attempts to block the launch of its undersea cable in South Africa.

Seacom’s arrival broke Telkom’s monopoly on international fibre connectivity, triggering a revolution in the South African broadband market. Almost overnight, data prices dropped by more than 50%.

However, that breakthrough was nearly delayed by years. In September 2007, just as Seacom was preparing to begin construction, the South African government made a stunning announcement.

Then-communications minister, Ivy Matsepe-Casaburri, declared that no undersea cable would be allowed to land in South Africa unless it was majority owned by local or African investors.

The proclamation drew sharp criticism, as most subsea cables were financed and operated by international consortia of telecom operators.

Given the immense cost of deploying submarine cables, critics argued it was unrealistic to expect all cables landing in South Africa to be majority-owned by local or African investors.

As a temporary workaround, Seacom said it would land the cable in international waters and make landfall over a cable owned by Neotel (now Liquid Intelligent Technologies), Telkom’s recently-launched rival.

Seacom still built the cable connecting to the Mtunzini in KwaZulu-Natal, but sidestepped the last-minute local ownership requirements through a sale and leaseback deal with Neotel.

The late Matsepe-Casaburri and her director-general, Lyndall Shope-Mafole, were none too pleased with this, stating that the workaround would not satisfy government’s requirements.

Many assumed at the time that the South African government was attempting to protect Telkom’s monopoly for as long as possible, as Seacom was expected to heavily undercut its prices.

However, it was later revealed that other vested interests were likely at play, which involved another submarine cable project backed by the AU’s New Partnership for Africa’s Development (NEPAD).

An industry source speaking on condition of anonymity told MyBroadband that politically-connected individuals were making life as difficult for Seacom as possible to protect their own interests.

Despite the political headwinds, Seacom pressed ahead, securing support from several South African investors — including Johann Rupert’s Venfin, Cyril Ramaphosa’s Shanduka Group, and Andile Ngcaba’s Convergence Partners.

With backing from Ramaphosa and Ngcaba, Seacom met every regulatory requirement the government imposed.

By the time it launched, Seacom said it was 52% African-owned, which included 25% South African ownership and 27% shareholding by East African companies. U.S. development group Herakles Telecoms held the rest.

Seacom revolutionised broadband in South Africa

Within two months of Seacom landing in South Africa, Internet service provider Afrihost launched an ADSL product offering data for R29 per GB, immediately reducing international data prices by over 50%.

Afrihost CEO Gian Visser said at the time it would not have been possible for them to undercut the prevailing prices as an upstart ISP had it not been for Seacom.

Six months later, Mweb one-upped them, launching an affordable consumer uncapped ADSL service from R219 per month (excluding Telkom’s monthly line rental and access fees).

The late former Mweb CEO Rudi Jansen said Seacom’s arrival was critical in allowing them to launch uncapped ADSL.

“Seacom was a fantastic partner,” he said. “They could see the opportunity to sell lots of bandwidth early on, and they helped us with some innovative solutions.”

Seacom’s arrival in South Africa broke Telkom’s stranglehold on subsea fibre capacity and opened the floodgates for affordable, uncapped broadband products to launch.

“We needed to increase the bandwidth through which people could communicate — faster, and cheaper,” Ramaphosa said in an interview when Seacom launched.

“Seacom has provided a highway along which people can travel. The world is going to be surprised when it sees how Africans can explode on this new highway and begin to do things that’ll astound the world.”

Ramaphosa announced his departure from the Shanduka Group on 26 May 2014 after being appointed Deputy President of South Africa.

His family’s interests were held in blind trusts while a transaction to merge Shanduka with Phutuma Nhleko’s Pembani Group received the necessary regulatory approvals.

The transaction was approved on 19 August 2015, marking Ramaphosa’s exit from Shanduka.