Becoming respectable
DataPro has never been shy. It always exhibited the energetic, schoolboy-like disruptiveness of its CEO, Douglas Reed, when it came to tackling its larger rivals after starting out as an Internet service provider 10 years ago.
But the appointment of Tony van Marken as executive chairman to the AltX-listed company in July has seen DataPro project itself in a more concentrated way. Van Marken has brought a new focus. Despite its renegade appeal, there has been some suspicion that the company was setting itself up to be bought by Telkom.
"We want to be the leading alternative telecom operator to Telkom," Van Marken insists. He says DataPro will concentrate on building its businesses over the next few years, not on looking for a suitor.
Van Marken sees DataPro offering a full range of telecom services. It has been awarded phone numbers by the telecom regulator, the Independent Communications Authority of SA (Icasa), and has signed an interconnection agreement with Telkom that allows calls made from a Telkom line onto its network.
Key to its ability to compete with Telkom will be the interconnection rate that Icasa will impose on Telkom for making calls on DataPro’s network.
If DataPro was looking for someone with a deal-making background and who projected a polished corporate persona, then Van Marken’s appointment will help investors and bankers feel at ease.
Van Marken is no lightweight. He is the former president and CEO of Canada’s Architel Systems, was a partner at venture-capital firm XDL Invervest Capital, and worked for Andersen Consulting in SA and the UK from 1988 to 1994. His air of corporate authority may be bit of a contrast with Reed’s entrepreneurial nature, but Van Marken says of the CEO: "I like entrepreneurs, I like people who make something from nothing."
Van Marken insists, however, that his appointment will not mark a change in DataPro’s renegade culture. There are no personal assistants and its customers can call any of the executives directly.
DataPro has also beefed up its executive team by bringing in Mike von Holdt from Nedbank Capital Private Equity as chief financial officer.
Van Marken and Von Holdt have been with DataPro for less than a year but already have their hands full. The group is in the process of acquiring Orion Telecom, a least-cost routing group, for R380 million, and announced last month that Lereko Metier Capital Growth Fund will take 20% of the business for R120 million.
Van Marken says this empowerment deal is important. The cash will in part pay for the takeover of Orion, but the deal also increases the overall empowerment holding to over 25,1%.
DataPro’s annual revenue is expected to surge from R196 million to about R1 billion when it completes its takeover of Orion. Taking over Orion also changes the nature of DataPro. "This is not an Internet service provider, this is a telecommunications company," Van Marken says.
Despite the positive noises, Van Marken’s work is not done. Analysts at its results presentation last year said they liked the company but did not understand how it worked.
"We’re bandwidth traders," explains Van Marken. The group buys bandwidth at wholesale prices from Telkom and then competes with Telkom’s retail division by selling this bandwidth.
Van Marken is optimistic about SA’s telecom market despite the slow pace of liberalisation. He foresees a split in Telkom’s wholesale and retail operations, boosting competition.
"Whether the playing field will ever be level is in doubt, but hopefully we are moving in the right direction", he concludes.
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