As Kingdom Bank acquires its assets we ask; what went wrong at Spiritage?

L.S.M Kabweza Avatar
Zachary Wazara

Updated title wording to fix grammar.

Zachary Wazara
Spiritage Group CEO, Zachary Wazara, speaks at a tech meetup in Harare in 2011. In his left hand is one of the telecoms devices his company launched the same year.

It’s not well at Brodacom. Not at all. Around this time two years ago, information in the market suggested the company was coming on the scene to change the game in Zimbabwe’s internet sector. It didn’t happen. And things seem to just get worse for the Zachary Wazara founded telecoms company. A report in the Daily News today (just the print edition for now unfortunately) says a local bank Kingdom Bank has secured an order to acquire Brodacom’s assets over a debt.

You will remember when Zachary Wazara first came out to announce his new company’s plans back in April 2011, he disclosed that the company had raised about US $25 Million to finance the roll out of its operations. He didn’t disclose then where the money was coming from but, coincidentally, the amount Kingdom is trying to recover from Valley Technologies, according to the report today, is US $20 Million.

Valley Technologies by the way is the POTRAZ licensed Internet Access Provider. Its operating name is Spiritage Business Solutions, itself part of a larger Spiritage Group, which also includes Mars, Suremed health Insurance, and eTranzact. Brodacom is just the consumer facing name associated with the company’s internet and voice products.

Rumours that Spiritage Business wasn’t doing well started trickling at the end of 2011. The company had just come out of a clumsy launch of its flagship service, where it mindlessly promised customers “true 4G” speeds. Our sources at the company told us senior executives were leaving (or being fired), delayed salary payments and other such. There were also rumours in the market suggesting the company had made serious mistakes procuring WiMax base stations that ended up sitting in a warehouse because they didn’t meet the technical specs.

Then it became official the company was in trouble.

Angry employees that had gone more than a year without salaries were seeking the intervention of courts to attach company assets. The Spiritage Group and its subsidiaries were also reported to be making huge losses. The company was also evicted from its Anchor House city center head office along Jason Moyo Avenue.

Kindgom Bank, according to the Daily news article, was alarmed when reports suggested Spiritage’s assets were being attached over debts owed to other creditors. This spurred Kingdom to make an urgent High Court application to stop this as, according to them, they own all of Spiritage property (loan security) given the loans they advanced the company.

Zachary Wazara is a former Econet Wireless Group executive. He joined Econet as Assistant General Manager for Marketing in 1996 and rose to become Managing Director in 2000. Wazara is said to have helped set up Econet in Botswana, Nigeria, Kenya, Burundi, Lesotho and other countries. He left Econet in May 2009 to pursue setting up his own telecoms company – Spiritage.

We tried getting comment from Wazara on these developments but our calls to his mobile went unanswered. Email sent to him over the past weeks have also not been responded to.

What do you think went wrong at Spiritage Business? Why is the company in this sorry state barely two years after launching? Can the company fix it or it’s headed for closure?

26 comments

  1. bob

    vakadya mari varume ava!

  2. oscar.habeenzu

    The problem, Limbikani, is that he spoke too soon, as in Zach. He should have just shut up and quietly deployed his business and let us the customers do the loud mouthing. Sad that businesses that are started by “breakaway” entrepreneurs are often perpetuated out of “bitterness” and “fear of being laughed at” that they forget to enjoy the entrepreneur’s journey. And like SunTzu always says “never go to war unless victory is certain”, Zach forgot that Strive’s Econet would not sit and marvel at their once respected founding CMO, not a chance. What Econet simply did was what Innscor does to anyone that wants to loud mouth in their areas of interest “thump them til the same sorry”. It works, not that I am saying its a fair game, but I mean hey, its business.

    1. Won

      What did you Econet did hear? I think Spirit age they overestimated their capacity to deliver. If they bought non-compatible base station…..I am sorry he was surrounded by wrong technical people!

      1. oscar.habeenzu

        It’s called Operation Squeeze the unprepared young opponents.

  3. guest

    mismanagement + looting = fail

  4. KuraiMGT

    The question is: Is it the only telecomm corporate in this mess (going under)

    1. umax

      Media reports suggest that Africom might be in the same predicament.

      Dandemutande (umax, utande) has been posting huge looses for the past two years, which have been justified as an investment in their wimax network roll out.

      In the interim period to June 30 2012 the Telerix incurred a loss of US$2,8 million against US$1,5 million last year. source: http://www.herald.co.zw/index.php?option=com_content&view=article&id=53793:masawara-suffers-us42m-loss&catid=41:business&Itemid=133#.UPWeQOQ3slo

      umax is very expensive and they invested in a tier 3 data center (running expensive vmware and cisco gear) which I personally believe will not a profit any time soon. Cloud computing will take a couple more years to catch up in Zimbabwe. Apart from the slow uptake of cloud computing in Zim, it seems like no one at Utande really knows what they offer in terms of hosting. I gave up asking for hosting and VPS pricess after 5 months, I asked Mike Weeden, Colling Franco, Sue Bolt and many sales consultants for a simple price list for 5 months and got none.

      If utande does not return to business basics and when Shingie’s monies run out, they might find themselves in the same situation as Valley Technologies.

  5. Magneto

    No Corporate Governance in Zimbabwe. Nepotism, Corruption, Greed and Lack of Managerial skills. We make use of “Kiya Kiya” and “They do thega” business strategies! Same with Africom and others.

  6. Cde_Hero

    How unfortunate, yet another ‘TeleAccess’ case.

    Was this Zachary Wazara as thick headed as Daniel Shumba who was so proud and could not listen to advice. Daniel Shumba was as proud and as a Peacork and as confident as a Rattle snake. One would think he was sitting on top of the world and actually owned it. He was really flying in those days when TeleAccess was promising but in no time he landed with great crash – Totally humbled. But He sacrificed so many professional employees in the process. Shumba refused good advice tohave TeleAccess start small, but made an unwarranted effort to start big, the size of Econet, which he had helped to build but left in a quarrel with Strive Masiiwa.

    Proverbs 12:15 Stupid people always think they are right. Wise people listen to advice.
    Proverbs 19:20 If you listen to advice and are willing to learn, one day you will be wise.

  7. EntrepreneurCrunch

    Success rate in startups is always very low. Probably they financed the business with short term debt, high interest could have chocked life out of them. But the issue of mismanagement or negligence could one big issue. You can’t order wimax equipment with wrong specs and you tell me you are a telecomms dude…what telecoms is this? They should have gone on with the lean startup model and then scale up if there is honey. Poor Broadacom.

  8. True 4 G

    what is Nigel’s and AfriAsia (Kingdom) plan with the company and assets? Is AfriAsia assuming all the Valley Technologies debts as well?? Without a good strategy and plan, acquiring Valley Technologies might be a bad idea for AfriAsia. How do they intend to recover their $20 million? One their biggest challenge is an uncooperative workforce which is demanding 2 years outstanding salaries upfront. Nigel has made an offer which the employees rejected at the end of last year. if AfriAsia plans to run the business they will have to employ the right people with the industry knowledge and experience, invest in network infrastructure – and all this is very costly and will take some time.

    Now to the question, what went wrong?

    1. Leadership, the lack of of it. Everything rises and falls with leadership – John C Maxwell
    2. Lack of systems and controls – mazvake mazvake, especially now, employees come and go out at will since they are owed salaries. I believe those that are still reporting for work are doing so to abuse company resources to run their own businesses or wane simbi dzavari kutora (kutora, kutizvitaurike)
    3. They might haveover invested in expensive Vmware Software (which requires expensive certified hardware), bought cars and houses and not forgetting “small houses”

    I am reliably informed that Valley Technologies registers local and international domains through one of the leading hosting company, which also host DNS for Valley, if for any reason their domain registrar DNS servers fail their client websites and emails will go down. (The decision to use a third party might be as a result of their failure to set up and manage DNS servers).

    1. Dogstar

      WZ didn’t surround himself with the right people. Who also gave him the wrong information so as to make the right decisions.

      25 mita up in smoke…#PuffPuff

    2. StayTrue

      you are so reliable Ronald, so reliable we look upon you to tell the whole world how your employers clientele infrastructure is setup. Straight from the gutter!!

  9. Chris Mberi

    What went wrong! they were never sure what to offer on the market. All those that saw their product list know what I mean. yese yese was their strategy and it does not work… talking from experience

  10. Time

    mxm that 25million could’ve gone into buying all of us some of econets over priced data bundles 🙂

  11. Tatenda Shavu

    The problem is Simple. They didn’t hire me

  12. Lenny

    Another start-up going down

  13. wengai

    such a promising start broadacom had!its looking like the cdma networks have failed to kick off in a way. look at struggling powertel, africom and the now defunct aquiva. all these are cdma networks, cdma is optimally designed for data and these networks were expected to seriously challenge the existing competition but that never happened.if u have been following developments of all these firm you would have noted that these firms were more of boardroom firms. They made big announcements, in most cases preempting their business strategies to the competition well before execution of the tasks. what was important then was just building more base stations and selling as many dongles and accessories for data network. broadacom was in byo for almost 2 years but their office was mostly closed during the day. i visited them many times and gave up after being greeted by the guard all the times. sadly he did not even know what was going on. evolution demands that firms that are run this way die immediately and never come back. i am sorry but thats how nature works.

  14. oscar.habeenzu

    As I said Limbikani the other day, there is a danger in Christian entrepreneurs when the blabber too much before they actually produce results. We are so typical, in our Pentacoastalism that we speak before we achieve and that is extremely disgusting and misrepresentation of God. Why do we do that?

  15. Prosper Chikomo

    Wazara has talent for sure. he was involved in several Econet rollouts but there is a huge difference between entrepreneurship and business development.

    Personally, i am always sceptical of businesses that are launched with huge amounts of capital. Econet itself was started with far less than Wazara started with. Startinf with less capital calls for one to be more creative and aggressive with less resources. Right now I do not even know what they have used that $20 million for. The best thing he could have done is intrapreneured, started the business inside Econet under tyhe ambit of Econet, but as a separate business partially owned by Econet, or even Telecel etc. he even went for acuisitions, acquiring eTranzact, which was a huge failure, in my opinion, at the same time he was running Brodacom, and a medical product. He should have concentrated on building one business at a time. I would rather have a small business that is profitable and successful than a huge and insolvent conglomerate saddled with debt.

    1. Ace

      if we all believed what we here, the world would ruled by kids.. What you dont is that ValletTech never got the 20mil, only about 5mil. Now i will give the benefit of doubt that you understand what “network roll-out” is… Its definitelty not worth 5mil.. Nigel Chanakira and his croonies (me being one of them, too hungry to keep arguing) misappropriated the loan due to the company and diverted into smaller loans elsewhere. Yes the man made the mistake is letting a struggling bank “Kingdom” manage their loan, yet he wasnt the only one falling for it. Afroasian yakanyuudzwa more than 30mil which again was used in covering Kingdom’s under capitalised coffers.

      1. saydzino

        u got it right there, Kingdom misappropriated the loan of kos with Zachy’s blessing, kuspinna madhiri and when it dawned that nothing cld be recovered to finance the telecomms biz, Kingdom, being e loan surety, claimed everything living Zachy w egg on e face. Madhiri akadhirikira and employees and unsuspecting creditors are e victims

  16. Shady

    Pride

    One thing i have seen with technology and business, don’t have pride, you might think you are going to do something big and then you will be shot in the foot ever so fast. Silence helps until your ducks are in a row

  17. wellafella

    They invested in the wrong technology.

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