We had the opportunity to speak to ZOL CEO, David Behr on his company’s recent acquisition by the Liquid Telecommunications Group. In the interview he talks about why they sold to Liquid, what this means for ZOL going forward in terms of independence of the ISP and service delivery to customers. Below is a transcript of the interview.
So what exactly has taken place?
Liquid Telecom Group has acquired ZOL. So we’re now part of the group. We have announced it to staff and we’ll be doing an email to customers in a day or so and we’re telling you now.
For how much?
That information is still private at the moment.
So, wholly owned by Liquid now?
And you [David] going forward?
Going forward I will stay the CEO of ZOL and I will start to do more on the Liquid side to help develop their products and network.
For how long?
We have not defined a set time. I’m very excited about my job. I’ve loved doing this for the past 15 odd years and I’ve just got even more excited. So there’s no fixed time. I’m really looking forward to it. If I absolutely hate it I guess I won’t do it for too long and if I absolutely love it I guess I’ll do it for a long time. I don’t feel I’m being forced to do anything. I really want to stay on. I really want to help ZOL grow. I really want to help Liquid grow. And I want to see the two integrating as well as they can and just become better.
On the customer side what does this mean?
I think for the customers it’s really good news. One thing ZOL has done in the past is we have made a very good name for ourselves. I think we’ve focused on a lot of customer support. We haven’t been perfect as you know; we obviously had some challenges in the environment but we’ve always tried to put the customer first and we’ve always tried to give them as best an experience as we can. I think now with much bigger group behind us we have much more resources and we have much more control of the network itself.
One of the things we have always complained about to customers in the past is that we haven’t owned the last mile and we haven’t controlled the last mile. So we have had absolutely no way to ensure that it’s got good quality of service. And I think the deal with liquid allows us to now have a much closer relationship with the people physically controlling the last mile.
So for the customers it’s going to mean we have much more access to the whole chain from the customers desktop all the way to the internet overseas. The whole chain is now part of this group and therefore we can give end to end guarantees.
But is there anything immediate, anything the customer will experience immediately?
These changes will take a short time to come to fruition. So it is not an overnight process. I think it will take time for it all to start to make a difference. I don’t think anyone can wake up tomorrow and find ZOL is a million times better because of this. It will take time to integrate. It’s going to take time to deploy the new systems. I hope over the next 6 months you will feel quite a difference. We will be launching some exciting new services.
So a customer is used to having a personal service, if they’re not happy with a certain service they are able to call a senior guy at ZOL and have it resolved? As part of a larger group, that will still be possible?
It will. One thing we’ve agreed to do is to keep ZOL very independent and very separate. We’re going to continue with the ZOL brand which is very strong. And we’re going to have the same relationships we have with our customers today carrying on. The customers are still going to be dealing with the same people. They are going to have the same management team. We’re going to have the same support team. So nothing gets worse for the customer.
It’s just that now, if there’s something we need to escalate we have much more visibility into the liquid network where things could be going wrong. We have much more power to get things fixed quickly. And even for staff, change is not going to come pretty swiftly; customers will still be dealing with the same people.
But there’s going to be some change, some staff coming from Liquid
We’re bound to look for areas where we can improve efficiencies. We will do a full skills and capabilities audit, and thereafter decide where people fit best. We’re going to be careful though to make sure customers that have been dealing with Liquid carry on and those that have been dealing with ZOL carry on. We’ll make sure we bring out the best of both companies and not create a muddled mediocrity, where it just becomes the lowest common denominator. We’re going to be very careful to make sure that the customer experience just gets better.
We’re both very fast growing companies. We’ve been growing independent of each other and we’ll keep growing. So it’s not like we’re bringing together two entities that are shrinking in some way.
Will these brands merge at some point?
It’s very hard to see in the longterm future. But for the foreseeable future there’s going to be no merging of those brands. We both have our strengths, I think ZOL has a pretty good brand and name in the retail space and Liquid has a good brand and name in the wholesale and corporate space.
Up to now the Liquid brand hasn’t been strongly advertised or talked about, I imagine that’s going to change. But I think we serve very different segments of the market. We have survived the past couple of years together without trampling on each other’s territories and I don’t see why it’s going to change now.
So Liquid is part of the Econet family and Econet is already doing stuff on both corporate side and consumer internet. How will that work? You’re competing against each other in the same family?
I don’t know how that is going to work because I’m not particularly familiar with the structures that are in place now. I haven’t focused much in the past on what Econet has been delivering. I think Econet is very focused, from what I can see, on GSM, on mobile data. And we’ve been much more focused on broadband by fixed access. We both resell WiMAX products and that can only lead to more choice for the consumer and a great example of how there is healthy competition. The market segments we target are quite different; it’s not as much mass market as Econet has been going for. We’ve gone for a much higher end prosumer if you like. We all got our market segments that don’t overly clash with each other. Whilst there is clearly some cross-shareholding, liquid is a very separate and regional entity.
But as we go forward this year, there’s going to be a lot of blurring of that line? The user that’s used to getting good internet at the office is now starting to get good internet at home as well.
I think the line in telecoms is getting blurred in general not just between the user at the office and the user at home. As data starts to be pervasive you start getting services like for example Voice over IP. That’s going to get more blurred with TDM over GSM networks. So there’s a lot of blurring that’s going to be going on but I think that the market is big enough to have the different segments targeted by different types of companies.
And for the big question; Why?
I think that ZOL has done very well for the last 15 years. For me personally, I’ve run ZOL the 15 years and it’s been a great experience. I’ve enjoyed growing the business from literally one computer and two modems. But I personally felt that it’s time for me to get on to doing something a bit bigger. From a company perspective I wanted to make sure that ZOL had a very sound footing going forward. I think the competition in the country is getting extremely severe.
I was actually thinking last night about it, telecoms is pretty the most competitive industry in Zimbabwe today. I can’t think of a more competitive industry. So there’s a lot of fragmentation at the moment and consolidation is quite inevitable. You’ve already seen consolidation happen when last year iWayAfrica (Telkom) bought out Mweb Zimbabwe and Africa Online. There are so many players in the telecoms space at the moment its inevitable there’s going to be consolidation driven by market forces because there is so much competition out there.
So one of the reasons to do this was to become part of a bigger group that would give us a much more solid footing going forward. And reduce the risk in customers choosing a company like ZOL. I think being independent, I think being small relative to what telecoms is, there was always a bit of a danger that customers would fear being with a smaller ISP. Although we would commit to giving a good service there was some degree of questioning over viability. We have always been successful up to now, but going forward there was always the possibility that we get squeezed because of the heavy competition in the environment. By doing this deal it ensured ZOL’s viability and gives us access to far larger resources.
In terms strategic alliances you had with other ISPs and IAPs, YoAfrica, Aquiva, Aptics. What happens to those?
Well we have to see going forward what’s going to happen to that. I don’t think a lot will happen. We will continue with our important strategic alliances. As you know, we did have an alliance with YoAfrica in terms of investment into these WiMax networks.
ZOL as an independent company has a choice where it’s going to buy services from. We are always going to buy services where we think we’re getting the best deal both in terms of price and in terms of quality of service. So there’s no reason for us to go and jump ship or be forced to buy from any particular vendor if we’re not going to give customers the best deal at the end of the day. So the most important thing is to keep our eye on the customer and make sure the customer is getting the best service and the best price. And I can’t believe that we would ever go a situation of doing something that would hurt that.
So I hope that our existing strategic alliances can continue and will flourish, and we will certainly work with them to make sure they are comfortable with it going forward. Obviously it takes two people, but from our side I hope that we continue to always be able to get the best service to the customer.
And your general comment in terms of uptake of internet services in Zimbabwe. Do you see any major things to happen in 2012
I think in 2012 were going to see a lot more uptake on another segment of the market because I think up to now internet has been quite expensive. I think it’s been very clear over the last year how much internet pricing has dropped. And obviously as you drop prices you make internet available to a much broader spectrum of customers. So I think you’ll see the market grow quite dramatically because of that.
We’re continuing to get as much fibre as we can to customers because we really believe that long term, the only way to deliver services is over fibre. Because once you put in that fibre, once you’ve invested in that fibre, you can deliver not just data services but all kinds of services over it. And of course it’s infinitely expandable.
This is fibre to the home?
Yes, we’d like to do fibre to the home. At the moment we’re doing fibre to businesses. We’re doing fibre to neighborhoods and ultimately fibre to the home is the end goal.
And you don’t think Wireless is there yet?
Wireless is always going to be about capacity because there are simple laws of physics that only allow a certain number of megabits to go over the megahertz. Of course wireless is getting improved over time but in terms of legacy network I don’t see wireless being able to deliver the high capacity bandwidth to the home. I think wireless will always have a good place especially mobility. But when we start talking 20 plus megabits speeds into each home, I don’t believe wireless can deliver that.
Do you think Zimbabwe is there yet in terms of needing 10, 20 megabits to the home?
I think everywhere in the world where you have delivered those kind of speeds, you find the consumers finding a way to make use of them.
Like YouTube, download of movies, rental of movies, video conferencing, a bunch of services that we can’t even envisage today that will come. I think that every increase in speed has always ended up being consumed by consumers. I don’t think we need to worry too much about what they will be doing with it because they will figure out ways or companies will figure out ways to deliver that to them.