Seacom to sell broadband directly to African businesses

SEACOM, the operator of an underwater internet cable that links Africa to Europe and Asia, plans to sell broadband directly to businesses in Africa after paying investors the $650 million they put into the project that became operational in 2009.

The move marks a change of strategy for closely held Seacom, which currently sells the high-capacity bandwidth to Africa-focused telecommunications companies such as MTN Group and Vodacom, who would then sell it on to their customers.

‘We have managed to recoup the initial investment on the cable and have paid back our shareholders in full’ in dividends, CEO Byron Clatterbuck was quoted by Bloomberg as saying. ‘As a next evolution in the business we have decided to start selling this high-speed internet directly to big businesses,’ he said.

Seacom’s cable stretches 17,000km and provides high-speed internet to countries including South Africa, Kenya, Djibouti, Mozambique and Tanzania. Its shareholders, who also funded the construction and laying of the cable, include South African billionaire Johann Rupert’s Remgro, US telecommunications company Herakles, and Shanduka Group, the South African investment company formerly controlled by the country’s Deputy President Cyril Ramaphosa.

The original strategy ‘worked well for us, but with businesses increasingly looking for high-speed internet and data delivery we have identified a gap in the market,’ Clatterbuck said. Since the switch in strategy late last year, ‘we have been signing up twenty to thirty companies a month,’ he said, adding that the original business model still makes up more than 90 percent of sales.

To boost growth, Clatterbuck said Seacom would consider buying smaller fibre businesses in South Africa and Kenya, its biggest markets. The company has also opened an office in Cape Town, adding to existing sites in Johannesburg and Durban, and will seek new premises in Kenya, the CEO said.

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