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SA companies lead a mobile revolution

Friday, 01 June 2007
The age of free cellphone calls is upon us. Yes, thanks to a company called Yeigo, we can now have our voice conversations sent over the internet - using voice over internet protocol (VoIP) – and only pay for the internet usage. It’s basically Skype for cellphones, the call is free, but you are no longer confined to sitting at your computer to make use of this technology. As the majority of South Africans don’t have PC Internet access but do have access to cellphones, this has the potential to be really big news.

But what makes it even bigger news is that Yeigo is a South African company and one of only two or three companies in the world offering true mobile VoIP, its CEO Rapelang Rabana tells me. In fact, according to the brainchild of the company, Wilter du Toit, it’s the most seamless and capable VoIP application for mobile phones yet.

Even more exciting is that its founders are not boring, old computer geeks – Yeigo’s founders came up with the idea in 2005 while in their final year of Business Science at the University of Cape Town. Unenthusiastic at the prospect of becoming just another cog in the engine of corporate South Africa, du Toit, Rabana and Lungisa Matshoba decided to go it alone and this decision looks set to pay off – they launched the first version of Yeigo earlier this year, and a new improved version this week.

Their comprehensive business model instantly grabbed the attention of South African investor Ivor Ferrer. He gave the trio backing and is now the company’s non-executive Chairman. Ferrer himself is no stranger to the visionary ideas of young entrepreneurs - he took the global software giants head on when he developed an accounting software package to better suit local conditions in the late eighties. Today, the software he developed, Pastel Software, is used by 160 000 businesses in 52 countries around the world.

Yeigo is certainly something that the big cellphone companies should be worried about because it basically means that if you are a Yeigo member and your friends are Yeigo members you can make free mobile calls to them anywhere in the world and without having to change your service provider. According to Yeigo, a five-minute call from a Yeigo enabled mobile to a Yeigo user would cost about 40c if connected through 3G (assuming a data cost of R1/MB), whereas a similar call between non-Yeigo enabled phones would cost approximately R20.

Yeigo has big plans, and these plans are certainly not limited to South Africa. “We are targeting 1 million users in the first twelve months, at least 70% of these we expect to come from elsewhere,” says Rabana.

South African companies spearhead innovation
Yeigo looks set to become a great South African success story, but as far as South African innovation in mobile technology is concerned, it is by no means an isolated example.

The unprecedented growth of the mobile market in this country has meant that the majority of our population has skipped the era of having a PC, a fixed-line telephone and a bank branch and is moving straight into the mobile era – where an ever-increasing number of everyday tasks can now be done on a cellphone.

And it has been thanks to South African companies, and not companies in the developed world, that many of these cellular functions are possible.

It’s not just the developed world that takes this for granted but South Africans too. How many of you know that it was South African companies that first launched pre-paid calling cards, true mobile banking or Internet access via your cellphone?

“South Africans are typically exceptionally entrepreneurial,” says Pieter de Villiers, a local entrepreneur who started global mobile messaging company Clickatell.

“In comparison to other more crowded markets, there is space to innovate and stand out from the crowd here. From informal sidewalk ventures to companies with global ambitions, South Africans are full of entrepreneurial ideas, and have the energy to make them happen,” explains De Villiers.

De Villiers certainly did. He started Clickatell with four other young South African entrepreneurs in 2000 and has grown it into the number one global mobile messaging company in the world.

The initial idea was to deliver “last minute” travel deals to customers via SMS. When the founders discovered it wasn’t possible to send bulk SMSs easily around the world, they decided to start that business instead.

With offices in South Africa, the UK and the US, today the company serves over 8,000 enterprises worldwide. Its global coverage of over 600 mobile networks in almost 200 countries and unique delivery infrastructure makes Clickatell unlike any other SMS messaging provider.

“South Africans compete successfully in the global arena all the time and there are hundreds of examples to prove this. It is critical however that the South African entrepreneur be encouraged to invent and build companies in South Africa. That requires a venture capital community that recognises the potential in South Africa and a government policy that will make it easier for SA companies to compete at a global level,” observes de Villiers.

De Villiers explains that we need more financial institutions willing to take more risk, more supportive infrastructure for start-up businesses and a more liberal exchange control environment that allows smaller businesses not only to be acquired by international players (intellectual property lost to SA) but to also be able to raise the necessary capital abroad to do some acquisitions of their own in order to become true global leaders.

Proof that there is money to be made for venture capital firms in this sector in South Africa came this month when HBD Venture Capital announced that it had made a 100% return on its R1,7 million investment in smartphone software developers, Red Five Labs (see below) in just over a year.

A series of world firsts
Despite these challenges, South African companies continue to deliver world-firsts.

Revolutionary South African company Fundamo was the first company in the world to offer real banking transactions using a cellphone.

The idea was born in 1999 when company CEO, Hannes van Rensburg, was CIO of Sanlam. Tasked with creating a more efficient way of enabling people to pay life insurance premiums, van Rensburg wanted to do this via a network that was bigger and more pervasive than the Internet. People thought he was crazy, what could be more pervasive than the Internet? His answer: mobile phones.

And he was right, well in the developing world anyway. The idea soon became one of creating a low-cost, wide-reaching banking system that is both affordable and usable for the unbanked, and so Fundamo was born. Fundamo’s software allows for person-to-person payments, bill payments and retail payments all using a mobile phone.

Fundamo has customers across the developing world, including banks, mobile operators with banking aspirations, financial services companies dealing with transactional payments, and third party payment processors and switches.

Its solution also powers MTN Banking, the world’s first stand alone mobile bank. That is, it has no branch network.

iTouch is another example. This company was responsible for the launch of Yebo! Internet for Vodacom. This was the world's first Internet access service to be made available via GSM cellular network.

Entrepreneurial-driven telecommunications company Cointel was the first company in the world to allow customers to buy airtime with credit cards using only their cellphones through their innovative product Autocharge.

Red Five Labs, co-founded by young entrepreneurs, Dusan Babich and Mike Welham (both 27), develops technology that interprets various programming languages for smartphones and allows them to ‘speak the same language’ - a global first.

Our big cellular operators also have their fair share to write home about, have a look at Vodacom’s impressive list of world firsts as an example. These include being the first GSM operators in the world to offer fax and data communications and access to the Internet, the first cellular network to implement satellite links, the first network to develop the SIM Surgeon, a diagnostic device aimed at detecting and repairing problems with SIM cards and the first cellular network to offer free voicemail access.

And it’s not just in the technology space where we are setting mobile world firsts. The South African film industry is credited with starting the mobile-phone-as-movie-camera revolution by shooting the world’s first full-length movie, SMS Sugar Man, entirely on cellphones. The advertising industry followed - last year the world’s first television commercial, filmed using only a mobile phone, was shot in South Africa.

South Africans should also credit themselves for the success of our mobile technology entrepreneurs. Perhaps it’s because our society has been faced with so much change that we have been so open to it. Had we not been such great adopters of these new-age technologies, our companies may not have been able to prove the success of their service offerings to the rest of the world.

When South Africa’s largest online network, 24.com, launched a new mobile platform that offers news, entertainment information, weather forecasts and email to the growing number of locals accessing the Internet via the web this month, it cited some pretty strong evidence for the proliferation of the mobile web locally:

  • BBC reported 20% of their international WAP traffic originating from South Africa;
  • Opera Mini, a leading mobile browser, report South Africa as one of their top five territories worldwide;
  • An international mobile advertising network claim over 60 million page views per month originating from South Africa.
  • Our adoption and innovation when it comes to mobile technology is testimony that South Africans really can compete with their high-tech peers in the developed world. As the saying goes, out of adversity comes opportunity. Africa’s big opportunity may well lie in the fact that it has been so underdeveloped to date. Because we do not have the infrastructure that the developed world has, we are not constrained by it and are innovating beyond it. And for a change, the developed world is following in our footsteps.

    By Marisa Berndsen

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