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Though iBurst CE Thami Mtshali wouldn’t be drawn on the actual value of its contract with Uthingo, he acknowledged that revenues that iBurst has reaped due to its tie-up with the operator – plus the cash injection from venture capital group Blue Label Investments, which now has a 40% stake in iBurst – have enabled it to embark on an aggressive broadband infrastructure roll-out countrywide.
Over the past three years alone, Mtshali says that iBurst has consistently reported double digit growth figures, largely from strong cash flows from Uthingo.
With the Gidani consortium – recently controversially awarded the contract to run the lottery – set to dispense with the services of various suppliers contracted by Uthingo, iBurst’s major revenue stream is under threat.
Gidani chairman Bongani Khumalo says that the consortium is currently formulating a policy to determine the new lottery operator’s procurement processes. Once that policy had been finalised, Gidani would invite interested parties to tender to supply various services.
Says Mtshali: "We’ve established a niche in the data business. Our service levels have been proved in the manner we’ve managed more than 8?000 terminals countrywide on behalf of the lottery. When the new lottery operator invites interested parties to tender, we’ll do so based on our proven capabilities."
Telecoms analyst André Wills says that the proliferation of network operators with countrywide distribution capabilities – such as Vodacom and MTN – could result in a fierce scramble for one of the industry’s most valuable contracts.
Says Wills: "Any operator boasting a nationwide distribution of infrastructure is capable of managing the lottery’s network. There shouldn’t be the mistaken impression that iBurst has a monopoly on that market." But Mtshali isn’t fazed at the prospect of squaring up to heavyweights such as Vodacom and MTN. He’s quick to dismiss the perception that iBurst’s survival is hinged on the revenue generated from its tie-up with Uthingo.
Says Mtshali: "We’ve diversified our business and brought on board two other companies, each of which is making a revenue contribution to the iBurst group almost in equal proportion to that of Uthingo."
Mtshali claims that iBurst had long mapped out a strategy concerning its survival without Uthingo. "We saw this coming a long time ago. For the past three years we’ve been agonising over the major challenges facing iBurst and I can assure you that nothing at this stage can dent our growth plans."
Unlike three years ago – when revenue from Uthingo accounted for about 90% of iBurst’s income – Mtshali says he doubts if it contributes even 10% today."
With just under 30 000 claimed subscribers, iBurst’s wireless broadband service is proving a hit. "Given SA’s growing demand for access to affordable broadband, wireless connectivity has become a high growth market," says Mtshali.
iBurst has lately been on an infrastructure expansion drive. "Adding to the Johannesburg, Cape Town, Durban and Pretoria metropoles, we’ve now deployed base stations in the Vaal region, Kimberley, Nelspruit and Port Elizabeth. And there are still many outlying areas in our sights."
Finweek
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