Going great guns
While the US$37,5m acquisition of GS Telecom in May this year increased the group's headcount from 100 to 360 and gave it a well established presence in the corporate data connectivity and services market in a further 13 African countries, including Nigeria, the June launch of GTV pits it against the mighty MultiChoice in Africa – outside of South Africa.
COO Mike van den Bergh says GTV, which has English soccer Premier League rights as a key drawcard in a number of African countries (excluding SA and Nigeria), is so far exceeding all expectations after launching in Kenya and Uganda. It's also preparing to offer services in a number of other countries before year-end.
Gateway is the majority owner of GTV, having recently brought in external investors, including Swedish private equity player Kinnevik (which also funded pay TV in Eastern Europe and is a major shareholder in African celco Millicom) and Citigroup, among others.
Although Van den Bergh declined to comment on that point specifically, you can imagine that MultiChoice's efforts to defend its market share back home in the face of oncoming competition must be affecting its focus elsewhere in Africa, which should seemingly open up a gap for a budding competitor such as GTV to take market share.
The pay TV business represents Gateway's first foray into the consumer market. The majority of its customers in its traditional connectivity business are telcos and other corporates throughout Africa.
Van den Bergh says Gateway is expanding its geographic presence in line with client demand. For example, a cellphone operator that wants to link its base stations throughout a vast country such as the Democratic Republic of Congo, which is only feasible using satellite. Or a multinational banking group that needs to link its scattered branches.
Gateway now connects 40 countries, the most recent additions being the Central African Republic, Sao Tome & Principe and Ethiopia.
Another recent development is building its own satellite earth station in SA, based in Krugersdorp. Van den Bergh says the $1m investment meant it would no longer have to subcontract capacity from SA to other countries and could demonstrate its physical infrastructure presence to prospective clients.
Gateway divides its business into four African regions: southern Africa, East Africa/Angola, Nigeria and West/Central Africa.
With fast-paced growth comes the need for additional management layers, and Gateway recently appointed Geoff Hardwick as MD for southern Africa, alongside three other regional MDs who report to Van den Bergh.
Hardwick has 25 years' experience in the ICT industry, having started in banking systems. Most recently, he worked with SA software vendor Blue Turtle. Van den Bergh says Hardwick's mix of experience in IT and telecoms, selling to and supporting large cellular companies in Africa, stood him in good stead to understand Gateway, which could be considered a relatively complex business.
Hardwick says he decided to join Gateway because it represented a really exciting opportunity in a fast-growing industry that was similar but different to what he'd done before and where he'd learn a lot. Although Gateway was already "tremendously successful" he says it also offered huge opportunity.
Gateway has raised roughly $187,5m since November last year in three separate tranches of $115m (for general expansion and debt restructuring), $40m (for GTV) and $32,5m (for the GS Telecom acquisition) respectively on the European debt markets.
Van den Bergh says the company is also highly cash generative and able to fund its expansion, in part using its own cash resources. There are no immediate plans to raise additional capital but he doesn't exclude the possibility should the right, sizeable opportunity come along.
Gateway has grown through a mixture of organic and acquisitive expansion, the largest acquisitions being Celtel's African satellite subsidiary Link Africa in 2005 and more recently GS Telecom.
The group should turn over roughly $200m (R1,4bn) this financial year to December. Van den Bergh says there are very few acquisitions as ideal as GS Telecom in Africa, but Gateway is constantly evaluating opportunities.
But currently the important thing is to focus on what's already under its belt, ensure GS is integrated properly, support existing clients whose demand for satellite and terrestrial (fibre) capacity is constantly increasing, and the launch of GTV in other countries.
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