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Stiff competition forces shutdown of Swift Global

FINANCIAL STANDARD
By - jevans nyabiage | June 18th 2013

By Jevans Nyabiage

Liquid Telecom, the new owners of Kenya Data Networks (KDN), has wound up Swift Global in a restructuring process that has made several positions redundant.

“Swift Global has been closed since it was not viable to run as an entity,” Liquid Telecom Chief Executive Officer Nic Rudnick told Business Beat. He said services that were offered by the Internet service provider have been transferred to KDN.

Swift Global, previously owned by billionaire Naushad Merali, offered retail services such as voice over Internet protocol (Voip) and data services via VSat and email access. But the entry of the likes of Safaricom into the retail data segment ate into the market share of ISPs such as Swift Global largely concentrating on the bottom end of market.

Rudnick said KDN only absorbed about 20 former Swift Global employees in the newly created company — KDN-Liquid Telecom — with the others let go.

“KDN will continue to offer services that were offered by Swift Global,” he said although he was hesitant to provide the exact number of positions that have been affected. “The key thing behind the restructuring is to ensure that we have a strong company offering quality products and services.”

KDN recently got new owners after UK’s Liquid Telecom bought a 60.8 per cent stake from South Africa’s Altech in a complex sale that also saw Merali dilute his shareholding in both KDN and Swift Global.

To turn around the fortunes of the struggling data carrier, Liquid Telecom has also made changes in the executive suite of KDN, a move that has seen some expatriates quit.

“The main restructuring is now complete, and we are now determined to put the firm in its rightful place,” Rudnick said, adding that significant changes have been made in the finance, sales and technical departments.

The firm did not renew contracts of the chief finance officer Roger Warren (South African) and chief commercial officer Atul Chaturvedi (Indian).

“A number of senior managers have left — some have gone back to South Africa,” he added,  but said that CEO Shahab Meshki remains.

The changes in KDN’s executive suite, which was dominated by expatriates, comes less than two years after the data company hired the managers in an attempt to curb losses and return to profitability. Altech brought in a number of expatriates in 2011 to “mentor” local managers for between nine months and two years, triggering a wave of resignations by the senior executives.

The company was pushed into losses mainly due to failure to secure big contracts, including a multi-million shilling contract with Safaricom last year.

Liquid, which operates fibre infrastructure in Southern and Central Africa, is majority owned by Econet Wireless, the company founded by Zimbabwean telecoms tycoon Strive Masiyiwa. Econet Wireless is making a re-entry into the Kenyan market after it quit the scene by selling its stake in yuMobile to Essar Group.

Early this year, Altech sold its entire East African operations — including a 61 per cent stake in KDN — to Liquid Telecom. According to the deal, Altech will subscribe $16.5 million in cash for 8.6 per cent ownership in Liquid, with voting rights of 10 per cent.

Apart from Liquid, the other key shareholder in KDN is Sameer ICT, which is associated with businessman Merali. Sameer ICT owned 96 per cent of KDN — while its former CEO Kai Wulff held a four per cent stake — until 2008 when Altech bought a 51 per cent share in the company. The South Africans increased ownership to 60.8 per cent in 2009.

The move to transfer services offered by Swift Global to KDN is expected to consolidate the offerings and enable Liquid match competition from firms such as Safaricom, Jamii Telecoms, MTN Business and Telkom Kenya that offer such services under one roof.

Liquid bought the entire shareholding in Swift Global where Altech owned 51 per cent while Sameer ICT held the remaining share. Liquid Telecom currently owns 80 per cent of


 

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