Newly-launched internet service provider (ISP) Kaya Konekta is looking to take on established players in South Africa’s underserviced communities in townships and rural areas.
This, as the larger ISPs increasingly target these areas, offering affordable internet services.
Established in 2023, Kaya Konekta is connecting residences in Cosmo City, Johannesburg, using wireless technologies.
The company is now looking to expand to other South African townships in order to grow its reach.
ITWeb TV spoke to Thabiso Malekele, CEO of Kaya Konekta, in a wide-ranging interview, during which he discussed the ISP’s expansion plans, what it takes to compete in the tightly-contested market, investment plans, as well as how the company wants to leverage SA Connect, the country’s ambitious broadband project.
Kaya Konekta was co-founded by Malekele and his childhood friend Kagisho Dichabe.
For an ISP to be successful, it’s a “numbers game” and the company now wants to spread its wings beyond Cosmo City, he said. Since it was established, it has been self-funded and is now looking for a capital injection to achieve its goals.
“Kaya Konekta is an ISP whose core focus is on the underserved, primarily because they are underserved, but there is demand there, which is not being met at the moment. So, we want to pursue that gap.
“If you look at South Africa, the economic disparities are very glaring, especially if you look at our townships and rural areas. Their access to resources is very limited. We are now living in the information age where connectivity is no longer a nice to have, but a necessity.
“If you take someone who comes from a township or rural area, they are on the back foot. If you don’t give them access to affordable connectivity, you will be setting them back even further. Our aim is to fill that gap and create something that is sustainable, and something that essentially empowers the individuals in those communities and the communities themselves.”
Network expansion
He revealed that next week, Kaya Konekta is set to switch on its network in townships in the Free State. “We are switching on in Botshabelo in Bloemfontein – everything is ready. We are also going to Arlington and we are looking to expand to Reitz.”
He added that just like any other ISP, Kaya Konekta provides services on top of other network operators.
“Telecoms is a scale game; you need the numbers and reach, but you don’t always have the capital to extend your reach, so you have to leverage off existing service providers to get that reach.
“Building our own infrastructure is quite capital-intensive. So far, we have managed to get by using our own investments, which is not easy. But it’s something that we believe in; it’s something that we believe we can grow and make a difference in doing.
“With that said, in as much as we have spent our own money on the network, we are running out of runway. We are cognisant of the fact that we have to go out to the open market. That’s something we are busy with at the moment, because in order to reach the scale that makes it economically viable and sustainable, you need those volumes.”
He explained that the ISP is mainly investing in wireless technologies because fibre is expensive to deploy, especially in the areas in which it operates.
“We’ve got technology partners that we work with, but in terms of working with other companies, it’s either leasing space on a tower from Vodacom or MTN.”
In terms of backhaul, Kaya Konekta works with companies such as Dark Fibre Africa, Openserve and Broadband Infraco (BBI).
“We are also part of the SA Connect BBI project. That’s one of the initiatives that I think our government has put its best foot forward in introducing.”
However, he noted SA Connect has some shortcomings. “My view is that they should invest more simply because it’s a scale game, and if you really want it to become more sustainable, you need to invest more and cover more.
“In a way, I understand their budget limitations, but I think it’s something they need to relook at and see how much more they can put into programmes like this because it changes the way we deploy in these areas.
“With us, we try and make the locals involved by employing the local youth. We speak with the councillors and they recommend the people that can do the jobs that we will be looking for. We get some guys who will be just sitting at home with IT degrees and you want to capacitate them, so that once the infrastructure is up and live, you don’t have to keep bringing in people, say from Johannesburg or somewhere else, to maintain the network.
“Coupled with that, we’ve got our own reseller programmes where the resellers get commission for selling vouchers. A lot of the resellers in Cosmo City are able to make a decent income.
“So far, our investment goes into the millions and to scale to the level we want and to be able to make a great impact, we will be looking at about R150 million. If we can get to a point where we can raise that, it will be ideal.
“Obviously, it’s not all at one go; it will be a phased approach, depending on which areas we will be targeting first and then moving to other areas.”
Stiff competition
Many ISPs are also now targeting South African townships with affordable internet packages. For example, Vumatel recently introduced Vuma Key, which offers uncapped fibre for R99 per month. The service is available in Alexandra and Kayamandi.
Alan Knott-Craig Jr’s Fibretime offers 100Mbps fibre for R5 a day in Kayamandi and Gqeberha.
Asked about the competition in this market, Malekele commented: “We are not operating in the same areas as them, which is a good thing. The minute you start congesting these areas with different service providers, it starts to affect the business model. With service providers, it’s not ideal to duplicate infrastructure unless you are coming with an extremely different technology. Vumatel and Fibretime are using fibre and we are more wireless.”
However, Malekele said Kaya Konekta is competing against different service providers in Cosmo City that offer different technologies, such as fibre and LTE.
“Even though the odds are against us as a small player without the deep pockets and resources they have, we’ve been quite competitive, with some customers moving to us.
“But it’s never easy to compete. In as much as I said there are no barriers in access to infrastructure, the flip side of that is even if you have that infrastructure − for example backhaul − in order to get pricing, you have to make a commitment of about 60 months, which is five years.
“This can be risky for us. The bigger guys can easily go into a five-year agreement and get charged less. They can also take more bandwidth or a bigger pipe, which means they get further discounts. So, you struggle to compete.
“But once we get the volumes and the capital to expand, that’s when we can start looking at those kinds of negotiations to bring our costs down. But we are still making decent margins.”
Kaya Konekta’s distribution model is currently physical and online, but it is looking to partner with a fintech firm to move away from cash-based transactions, he added.
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