Sunday, September 27, 2020

BPC makes a U-turn on Liquid Telecom deal

Liquid Telecomm Botswana Limited (LTBL), a joint venture company owned by Botswana Power Corporation (BPC) and Liquid Telecommunications Holdings Limited (LTHL) could be the biggest loser in an about-turn deal that is likely to suffer a premature death.

Sunday Standard can confirm that the joint venture business between BPC and the international company hangs in the balance after cabinet made changes to the initial business plan between the two entities.

The move has further delayed operations of the new company, almost two years after its birth.

On Friday, BPC spokesperson, Dineo Seleke said that the established telecommunications joint venture has not progressed much due to a pending license approval by the Botswana Telecommunications Regulatory Authority (BOCRA).

Seleke also confirmed the setting up of a committee to review proposed business model of using the national optic fibre including that of BPC.

While Seleke claims that, “BPC is not aware of any asset to be transferred, Oteng Mokowe, Public Relations at the ministry of Transport and Communications told Sunday Standard late Friday that indeed the BPC fibre cables have been transferred.

“The reason was to rationalize nationally available infrastructure and costs associated with maintaining it, or realizing a better return on investment. Time and again the ICT service providers require huge investments in building infrastructure, for this reason the transfer is to facilitate growth of service provision by ICT Service providers and also to be promoted”, Mokowe said.

In total, BPC owns 1500 KM of fibre cable containing a total of 1020 fibres of which 574 were allocated to Liquid Telecom in the fibre commercialisation project leaving 446 fibres for BPC use.   

Liquid Telecom was selected as the preferred joint venture partner following a competitive bidding process in 2016, in which five local and international telecommunications companies including BoFinet submitted bids.

The agreement was signed by Jacob Raleru, former BPC CEO, and Nic Rudnick, Liquid Telecom Group CEO, in Gaborone where they announced that the joint venture will operate under the name Liquid Telecom Botswana, with BPC taking 42.5 percent stake in the newly created venture. The two partners said the structure of the deal will enable BPC to make more effective use of its existing assets, while allowing Liquid Telecom to better serve the network needs of its wholesale and enterprise customers in and outside the region.

“Liquid Telecom will be the majority stakeholder and will, as the technology expert, be responsible for the day-to-day management of the company. The arrangement allows BPC to diversify its revenue base, while maintaining focus on its own core mandate of providing secure and reliable electricity services to the national economy,” read the joint statement from BPC and Liquid Telecom at the time.

At the core of the deal was an agreement that Liquid Telecom will tap into BPC’s expansive infrastructure, creating a new telecoms network provider with extensive reach across Botswana.

However the initial deal has been derailed after the Ministry of Transport and Communications proposed a change to the business model, barring the new venture from using the national optic fibre including that of BPC. This decision was approved by cabinet last month. Furthermore, the government has insinuated that BPC played fast and loose with the procurement and asset disposal guidelines.

“The decision was to help speed up and actualize universal access to optic fibre in the country and BPC infrastructure lent itself to the achievement of this strategy,” said Eric Molale, minister of Mineral Resources, Green Technology and Energy Security. As a result of this, Liquid Telecom Botswana will have to apply directly to Botswana Fibre Networks (BOFINET), if they are to use any optic fibre.”

Liquid Telecom Botswana is facing another hurdle in obtaining a telecommunication licence from Botswana Communications Regulatory Authority. The regulator is yet to approve the application which was made more than 10 months ago. Molale said the licence application process has been put on hold as other government ministries are in the process of reviewing Liquid Telecom Botswana’s business model.

“We could not have said we want to raise money by venturing into Liquid Telecom without actually following the procedures that were necessary and that is why we have encouraged the company to now apply directly for any fibre optic under the ministry of Transport and Communications, and not to be issued by BPC because BPC is not in that business,” said Molale.

A subsidiary of Econet Global, Liquid Telecom began life as the satellite and voice operator Econet Satellite Services, which was founded in 1997. Rebranding to Liquid Telecom in 2004, the company went on to launch the high-speed, cross-border fibre network linking southern Africa to the rest of the world in 2009. The company has since grown to provide services to more than 50 global wholesale carriers operating in eastern, central and southern Africa, Europe, North America and Asia Pacific, as well as the national and international enterprise market. Liquid Telecom supplies fibre optic, satellite and international carrier services to Africa’s largest mobile network operators, ISPs and businesses of all sizes. It also provides payment solutions to financial institutions and retailers, as well as data storage and communication solutions to businesses across Africa and beyond.

While Liquid Telecom, the leading independent data, voice and IP provider in eastern, central and southern Africa, is largely unknown in Botswana, the owner of the company is well known. The company an affiliate of Econet Group, a conglomerate founded by Dr Strive Masiyiwa, an enterprising Zimbabwean billionaire who first came to international prominence when he fought a five-year constitutional legal battle leading to the removal of the state monopoly in Zimbabwe’s telecommunications sector. The landmark ruling is regarded as one of the milestones in the opening up of African telecommunications to private capital. But in Botswana, Masiyiwa is well known as the man who established Mascom, the leading network service provider. However Masiyiwa has over the years reduced his stake in Mascom and he now holds a minority stake through Econet Wireless.

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Sunday Standard September 27 – 3 October

Digital copy of Sunday Standard issue of September 27 - 3 October, 2020.