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Liquid Telecom goes long on Africa’s startups as future clients

Sunday, April 21, 2019

Liquid Telecom goes long on Africa’s startups as future clients

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Digital infrastructure company Liquid Telecom is betting big on African startups  by rolling out multiple sponsorships and free internet across key access points to the continent’s tech entrepreneurs.

The Econet Wireless subsidiary also is partnering with local and global players like Afrilabs and Microsoft­­ to create a cross-border commercial network for the continent’s startup community.

“We believe startups will be key employers in Africa’s future economy. They’re also our future customers,” Liquid Telecom’s Head of Innovation Partnerships Oswald Jumira told TD.

With 13 offices on the continent, Liquid Telecom’s core business is building the infrastructure for all things digital in Africa.

The company provides voice, high-speed internet, and IP services at the carrier, enterprise, and retail level across Eastern, Central, and Southern Africa.  It operates data centers in Nairobi and Johannesburg with 6,800 square meters of rack space.

Liquid Telecom has built a 50,000 kilometer fiber network, from Cape Town to Nairobi and this year switched on the Cape to Cairo initiative—a land based fiber link from South Africa to Egypt.

In 2017, the company generated 39 percent of its $680 million annual revenues on connectivity services to enterprise clients, 32 percent from wholesale data services, and 22 percent on wholesale voice products to mobile carriers.Liquid Telecom clients include MTN, Vodacom, China Mobile, Barclays Bank, and Google.

Though startups don’t provide an immediate revenue windfall, the company is betting they will as future enterprise clients.

Reliable estimates are sparse on how fast they’ve grown, but there are now 1000s of startups in Africa expanding across multiple sectors; from fintech and e-commerce to agtech and logistics.

While performance events are still a bit light, the continent minted its first unicorn, Jumia, in 2016 and has produced a handful of exits.

The round size and overall value of funding to African startups has picked up considerably over the last year. Kenyan based fintech company Cellulant raised $47.5 million in May and just this week, South African lending venture Jumo raised a $52 million round led by Goldman Sachs.

African man holding Nigerian 10 naira bill.

“Step one…in supporting startups has been….supporting co-working spaces and events with sponsorships and free internet,” Liquid Telecom CTO Ben Roberts told TD. “Step two is helping startups to adopt…business services.”

For that first step, the company has tapped into Africa’s tech hubs—now estimated at 442 by GSMA—which have become a focal point for startup activity.

Liquid Telecom provides free internet to 30 hubs in seven countries and is active sponsoring startup related events.

On the infrastructure side, it’s developing commercial services for startups to plug into.

“At the early stage and middle stage, we’re offering startups connectivity, skills development, and access to capital through the hubs,” said Liquid Telecom’s Oswald Jumira.

“When they reach the more mature level, we’re focused on how we can scale them up…and be a go to market partner for them. To do that they’ll need to leverage…cloud services.”

Microsoft and Liquid Telecom announced a partnership in 2017 to offer cloud services such as Microsoft’s Azure, Dynamics 365, and Office 365 to select startups through free credits—and connected to comp packages of Liquid Telecom product offerings.

“We’re working with Liquid on the continent to reach 100 hubs in Africa,” said Chris Lwanga, Microsoft’s Senior Director for Cloud Communities. “There’s many other areas we’re thinking about, but that will come out later,” he said.

On the venture side, Liquid Telecom doesn’t have a fund but that could be in the cards. “We haven’t yet started investing in startups, but I’d like to see that we do,” said chief technology officer Ben Roberts. “That can be the next move onwards… from having successful business partnerships.”

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