Paratus Holdings: Infrastructure is key

By Kelvin Chiringa and Rosalia David
December 2016 & January 2017
Prime Business

Managing approximately N$ 78 billion of the Namibian economy, the Paratus Group has seen tremendous growth throughout its history and has evolved into a fully-fledged multi-national privately owned Namibian company. It has taken the lead in the private sector by seriously making considerable investments into infrastructure development at a time when many others have done very little to nothing in that regard. Prime Focus Senior Business Journalist, Kelvin Chiringa (KC) engages with the co-founder and Head of the Paratus Group Barney Harmse (BH) who gave an in-depth analysis of the company’s investments, its role in the country’s ICT sector as well as its growth prospects.   
KC: Could you kindly provide us with an overview of what Paratus Group is, the key market(s) it operates in as well as the integral role you play in its operations as the Group CEO?

BH: The Paratus Group is a 100% privately owned Telco with licensed operations in Angola, Namibia, Zambia, Botswana and South Africa. Except for these offices the Group provides products and services to a total of 22 African countries at this point in time. My primary role as Group CEO was and still is to gather the right people for the right job, and do my utmost best to keep them together as a family.

KC: How does the recent launch of the LTE Mobile Data network in Namibia influence your overall position as a key player in the regional Information and Communication Technology (ICT) sector?

BH: LTE Mobile Data is the key component in delivering data and our new value added services to the consumer and corporate market. We are still new to the consumer market in Namibia, and the LTE network to the consumers and our traditional services to the corporate market complement each other well.

KC: How big a challenge has access to infrastructure been to Paratus Telecom in Namibia and its operations in other African countries in which it operates?

BH: Namibia has been more challenging to get access to infrastructure in comparison to the other countries we operate in. In Namibia we decided more than two years ago to start investing massively in infrastructure, because our fellow incumbents were not prepared to “play nice” unless we had something to offer in return. We now know it was the right decision to invest into infrastructure such as fiber and LTE Mobile data. We are experiencing ”less animosity” from our fellow incumbents since we now have more to bring to the table.

KC: In terms of regulation and policies, would you say the market in which the Paratus Group operates is supportive of the growth of operators of its nature?

BH: In the beginning it was very tough. As time goes on, an operator plays a more critical role in terms of regulations and policies because you actively contribute to establish the rules by which one is guided in that market. Every operator has a responsibility to actively contribute to create legislation and regulation that will be beneficial to all. If you do not participate actively, how can you expect to reap the benefits of the sector?

KC: In 2014, Paratus Telecommunications in Namibia acquired Vox Telecom, how have these kind of strategic acquisitions impacted on the growth of the company?

BH: Growth by acquisition is not uncommon in a limited market. Diversification is one reason for acquisitions to also grow in markets where a specific market segment may have reached its limits at that time. Making the right acquisition is key for your growth. Even making the wrong investments sometimes and learning from that experience is still better than doing nothing. It is absolutely critical to maintain a dynamic business model, and not fall into the trap of a static operation that will eventually stagnate or even decline.

KC: Does the Paratus Group envisage a future where it is a major player in terms of the mobile telecommunications market in the countries where it operates?

BH: Which part of mobile telecommunications? The GSM Voice side or the Mobile data side? Traditional GSM Voice will be dead in the near future. The future is Mobile Data, it arrived some time back already. Yes, we are becoming a major player in the mobile data market. Consumers are using a proper data connection more and more to make voice calls for some time already. The massive impact of OTT Apps (Over The Top) on the traditional GSM Networks are proof of that. You can follow the battle of GSM networks in South Africa against OTT Apps such as WhatsApp, which will be a determining benchmark for future GSM and Mobile Data Operators. It is our opinion to rather disrupt the market by adopting OTT technologies than disrupting the choice of the consumer by preventing access to OTT Apps.

KC: With the ICT sector being dependant on technical skills, would you say finding the people with the right technical skills to carry out the vision of Paratus is difficult?

BH: General telecommunication and ICT Technical skills across Africa are not big a problem, even in countries like Namibia where the population is quite small.  Specialised skills however in certain areas where we focus, for example, the core network, radio planning on the base stations, microwave technologies, satellite services technicians, Voice over IP experts, to name only a few examples, are more difficult to find.

Make no mistake, Namibia has plenty of general skills in the ICT sector and a lot of able people that can learn. If we do not find the right specific skills, we develop them and make sure we keep them. Most of the able bodied resources in our industry in Namibia are already working for us, and we will keep them at any cost.

KC: What are some of the key challenges faced by Paratus Telecommunications in Namibia as it looks to safeguard its corporate objectives?

BH: We do not mind competing with any of our fellow incumbents in Namibia like Telecom Namibia and MTC that are local and invest back into Namibia. We do however have a very serious problem with the “plunderers”, short or long-term plunderers, who do not invest into infrastructure or the community, and suck Namibia dry by taking all the money out of the country, and not investing locally. Such actions deserve to be fought with passion and we will continue to disrupt the market in the face of adversity from these operators. We have to defend our country from such entities.
 
Here I am only referring to licensed operators in Namibia, and irrespective the percentage shareholding in Namibia, one or more these operators have been sucking our country dry for more than 20 years. This is completely unacceptable, and our Government must help us to address this very serious issue. If you bring the money into the country, then there’s no problem. Let’s first look at the terms for the monies, and if we all agree, you are most welcome to come sit at the table.

When we for example start an operation in a new country, the very first thing we do is visit the regulator in that country, and ask them what the rules are. We observe these rules closely, and we make long term and sustainable plans in those countries when we set-up shop. If we have visitors coming to Namibia they should do the same. That is not too much to ask, is it?

Namibia’s primary objective, now more than ever before, should be to keep every penny in the country.

KC: Could you give us a brief background about yourself and the path that led to you being the CEO of a multi-national ICT Company that is Paratus Group?

BH: My beginnings are very humble. I started out as a programmer just after independence with then Central Personnel Institution which eventually became the Office of the Prime Minister between 1989 / 1990. After which time I remained mainly in the ICT sector. I also co-founded the original UUNET Internet Africa in Namibia during September 1996, which evolved into what is today MTN Business in Namibia. During 2003 / 2004 a few of the old UUNET guys and close partners started the Internet Technologies Group, which evolved into Paratus. The original founding members that include: Myself, Rolf Mendelsohn, Schalk Erasmus, Miles October and Martin Böse are still together today, almost 14 years later.

KC: Could you outline some of the key milestones attained by Paratus Group since its inception?

BH: During 2006 we rolled out the first MPLS Network (Multiprotocol Label Switching) in Namibia which is still the preferred platform to deliver data and network services to the corporate market today. We established the first private Satellite earth station during October 2008, which brought about significant change in the VSAT market, in terms of price and service.

We also completed the first private international cross-border fiber connections to South Africa and to Zambia during 2011 and 2012
On the 15 of April in 2016, we launched the first LTE Mobile Data Network in Windhoek.
We constructed the First Private fiber ring in Windhoek in 2014 and 2015, completely utilising our own infrastructure.   Since the 10Gb (100Gb Ready) core fiber ring was completed, multiple smaller fiber rings have been constructed throughout Windhoek.

In November 2016, we engaged the First FTTH (Fiber to the Home) project, when we activated the fiber going to the Finkenstein Manor and Village developments, just outside Windhoek on the way to the airport, which can also be called FTTC (Fiber to the Complex) , an acronym I personally coined. It also more commonly referred to as “Fiber to the Curb”

KC: How does Paratus in Namibia address the issue of Namibia being so vast and yet so sparsely populated in the provision of its services?

BH: These are the demographics we deal with, exactly that. Namibia is huge and does not have a big population. Neither do we have a lot of wealth in terms of natural resources. Yet, in many respects Namibia is considered to be the Switzerland of Africa. You have to make the most of the opportunities that present themselves in our market. You have to plan for that and expand, irrespective of the revenue derived. We are here to make a difference, and will continue to do so into the future.

KC: With most multi-national companies operating in both Namibia and South Africa, you often find their base in South Africa as the country is considered to be more cosmopolitan. Paratus Telecoms has transcended this notion, could you elaborate on the decision for the company to retain its Namibian roots?

BH: It’s easy. All you need is a base where the infrastructure in that country is intact, and political environment is stable. You need a base where you have access to the right skills, with the right attitude. The world has become very small over the past 20 years with new technology in telecommunications, and anybody can be online anywhere in the world at any time. It does not really matter where your HQ resides. In our case Namibia is the best country and option for the Head Office. The rest of the countries are just a flight away if we have to travel.

KC: As the head of a multi-national entity such as Paratus Telecom Holdings, what are your philosophies about leadership?

BH: A good leader should be able to listen, and execute based on collective input. A good leader should be able to fight very hard for what has been achieved and defend it at all times. A good leader puts his staff first, only then will the customers experience a world-class service; has the courage of his convictions and does not fear to fail. A good leader understands that common sense is primary, and everything-else is secondary. A good leader must be able to motivate his staff when circumstances are difficult, he must be able to influence them positively and convince them to get going again. I protect gold, so I collect human capital, I defend it ferociously, keep it together, and keep it safe. Now you know our secret. I try to find myself in all of the above, in some examples more than others, but it lays the foundation for my efforts and the team I surround myself with.
 
KC: What are the long term objectives for Paratus Group in terms of its growth prospects?

BH: In Namibia we have invested over N$1 billion already, if you add our contribution to our incumbent and own monies converted into infrastructure.

We are planning a further N$ 114 million into infrastructure in the next 8 to 14 months. The Group in Africa is planning US$ 110 million investment in the various countries over the next 3 years. The Group turnover for February 2016 was close to N$ 1 billion. We are aiming to achieve a total revenue of N$ 1.2 billion for the Group by February 2017. We have 200 staff in Namibia, and almost 400 staff across Africa. We put food on the tables every day of more than 2000 people in Africa if you work on a conservative average family size of 5 people per income member.

KC: How important is it for Paratus to make investments into under developed and rural areas in Namibia?

BH: During the Investors Conference in Windhoek in November of this year I indicated that we need more Foreign Direct Investment (FDI) into Namibia and Africa. At the ICT workshop at the investor conference, Paratus was the only operator that made a pledge publicly to the ICT Minister through which we will commit connectivity infrastructure to 50 regions or destinations or communities where the Minister deems it may have the most impact. We committed that, if there are any investors or contributors locally or internationally that are willing to pledge bandwidth to these 50 regions, we will provide the VSAT systems that are necessary to connect these communities at no cost.

KC: What does Paratus Telecom do and have done to enhance the social responsibility towards their employees, and the empowerment of Namibians?

BH: Already 4 years ago we allocated 30% of our company to our staff in Namibia via a staff share scheme. Amongst the most important selection criteria was how long have you been with us, irrespective of your status in the company, irrespective of your race, your colour, irrespective of your education. We gave 30% to the Paratus family members that has helped us to build this magnificent company. Any other staff that did not qualify for the staff share scheme in terms of the number of years that you have been with the company are given the opportunity to buy shares should they prefer to do so. In summary, 30% of Paratus Telecom is owned by our staff. Because we were the first Telco to do so in Namibia, it clearly confirms our commitment to Namibians and our country, and it definitely illustrates yet again, our role as the leaders when it comes to empowering the people of Namibia.