How Africa changed the mobile phone business for ever

56-18The potential investor, looked me in the eye, and said, “Your numbers are totally unrealistic; we have never seen an operator with such high subscriber growth projections….”. Then added, with disbelief, “either you do not know what you are doing, or you are doing something we have never seen before. So which is it?”

International investors, in London and New York, can sometimes, be quite aggressive in their approach, and you have to take that in your stride.

Then at this point, Jan would pitch in, and say, “yes, Strive has something quite novel, he wants to introduce, that has never been done before…even here in England.” And with a gesture of total confidence, look at me, and say, “tell them Strive. Tell them about “prepaid”, tell them about your plan to go for prepaid right from the outset.”

Prepaid, which we would brand, as “Buddie Prepaid”, was our “secret weapon”. Yes, believe it or not we introduced a commercial prepaid service, in Zimbabwe, before they introduced it in London and New York. We did not invent it, but we had realised its full potential. 

As soon as Jan, our advisor from Standard Bank London, would give his signal, Jeff and I, like a well drilled tag team, would make our presentation. We would show our research, and our financial projections, and then show why we believed even ordinary people would one day, own a cell phone, instead of just the rich, as elsewhere in the world, at the time.

You are only ever given at most 30 minutes to make your “pitch”, to these guys, who control more money than governments; if they like you, otherwise its 10 to 15 minutes, and a polite, “thank you”.
We had been round to about 10 major investors, all with polite, “thank you-s”. Then one day, our advisors, called to say that, one of the big investors, interested in Africa, wanted to see us again. The team, we met was led by an elderly white gentleman, and he had with him a group of technocrats, who included several Africans. He listened to me, quietly, occasionally questioning, our numbers, and assumptions. The meeting, continued for more than the customary 30 minutes. Then he suddenly declared, “I am in; work out the details with my team. Also tell anyone you meet from now, that, we are in.” And with that he got up and left.

That was the breakthrough, everyone looks to, when raising capital. We had hit the jackpot, the door to the global capital markets, had been opened for us!

From there we went to New York, and by the end of our tour the calls were coming in, thick and fast. We were oversubscribed. We returned to Harare, and launched our prospectus. As soon as the local institutions heard the news from London and New York, they changed their attitude, towards us, and rushed forward to also buy. Before that they had been laughing at us, saying they would not buy shares in a “start up”!

I insisted that priority be given to ordinary people, first.

The most moving moment for me, was when the late wife of Pastor Gatsi, Pastor Chido, came to me, with a large sum of money, and wanted to know how she could buy her shares. When I asked her how she got the money, she said she had sold her car. She would not accept free shares, and told me, they were too valuable to get for free, because she knew how they came about! It brought tears to my eyes.

Every member of staff, who had been with us, was allocated shares.

We were massively oversubscribed. Our shares sold at the equivalent of less than 1 US cent, in today’s money, they are now worth 62 cents, and this is considered half their true value, due to the liquidity problems, in Zimbabwe today.

I was right about the impact that “prepaid billing” would have. Over 5bn, people, in the world, have cell phones today, and 99%, are prepaid. Of these over 700m, are Africans.

This section has a “post script”, which will blow you away.

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April 2014Edition56

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