Bringing Internet Services to the Cape Townships

Justin Farnell - profile

• Grandson of Alan Farnell, founder of global electronics distributor www.farnell.com

• BA Honours Graduate Politics, Philosophy & Economics, Oxford University 1989

• Post Graduate Entrepreneurial Strategies Course, University of Cape Town 2003

• Moved to Cape Town from Switzerland with wife and 2 boys in September 2008

• www.linkedin.com online profile and contacts

www.farnellwireless.co.za

• Sold and project managed iBAHN South Africa’s first HD IPTV solution for the www.tajcapetown.co.za

• HD blockbusters and premium TV on demand

• Internet, full video streaming via the TV

• Excessive cost of broadband is slowing deployment and uptake of these new services

• Launched first Internet Radio with www.mweb.co.za in 2009

• 15,000 + radio stations streamed over home WiFi connection

• Take up low due to lack of online eyeballs and cost of bandwidth.

• MWeb’s uncapped ADSL should help

So what about the other 2 million Capetonians?

• N2 from the airport tells only half the story

• Barrier to improving township poverty:

• Fear - its dangerous!! Well so are parts of LA, so let’s get things in context.

• Racial - watch the rugby in Soweto..forget it!

• Big business – FNB, MTN, SHOPRITE own you

• Education – what’s a web browser?

• Technology – poor infrastructure? Yes and no

The fork in the road

Take the N1 to the CBD

• Internet cafes and print shops are everywhere

• Rents are high

• The top 15% have already been given lots of broadband options iBURST, VODACOM, NEOTEL, MWEB

• The TAXIS are the prime communication links for many people

Take the N2 to Gugulethu

• There is little or no Internet Service provision in the area for over half a million people

• The “big boys” TELKOM, NASHUA, VODACOM focus mainly on pre-paid mobile (lots of cash in that!)

• Containers are the defactoretail outlet

The township solution

• Talk to the locals – develop relationships – it takes time• Umlungu in the township • Location, location is even more important but land is scarce• The landlords – local self made businessmen a) Mzoli – famed for his restaurant and co owner of

Gugulethu Square Mall..the preferred location but rents too high

b) Zongs – owner of KTC Spar – Nyanga – shared the vision and agreed to renovate one of his disused shops in the Paradise Buildings on Emms Drive.

Decision to open shop in Nyanga, March 2010 and in less than 2 months...

LAGUNYA opens MAY 1st 2010

• An African brand is born

• Partnership approach rather than just sell to

• Service delivery up; prices down

• Cultural sensitivities

• Local community support and employment

• Technology? That’s the easy bit

• The future? Three shops by year end

My wife Julia and I with Sonwabile, the IBC Manager putting the shop sign up on Saturday May 1st 2010

6 customer Desktop PC’s with new 17” Monitors and refurbished PCs and laptops for sale, (in corner)

Lagunya Reception area for printing, binding, PC to Fax (its all wireless IP) and CV and Gmail/online profile creation...we are looking for GOOGLE sponsorship!

In case you thought we opersate behind bars, our

The security gate stayed open all day..up until Wednesday 13th October when the staff were robbed at gunpoint. The harsh realities of life in the township.

Dell PC and keyboard with XP for R1500 plus Neotelwireless Internet phone R600

Partnerships

• Low cost refurbished PC’s

• Under R2000

• P4 3Ghz, 512, 40-80Gb, CD-DVD, 17" CRT, Keyboard, Mouse, XP OS and 6 month warranty

• P4 Laptops

• Under R3000

Partners

• Neotel pre-paid wireless phone R599 one off and R100 airtime top ups

• Its portable, calls mobile and fixed lines and sms

• Signal quality in the townships is very good

• USB for a PC or Laptop now makes home/office Internet an affordable option for the first time

December 7, 2010 15

Lagunya will be the only authorised reseller in the neighbourhood for this new wireless internet phone

Brand and short term growth strategy

• Nyanga IBC to profitability

• Engage local schools in the area.

• Launch of “virtual” store in Gugulethu Mall, to sell Neotel phone and Just PCs.

• This will grow Lagunya brand awareness.

• SMS marketing campaign and updates (customer database already over 300).

• Gugulethu as the central “hub” to the other spokes in Langa (N2 Gateway development) and Nyanga.

• Grow “roaming” Lagunya Loyalty Members

• Utilise shop as a training facility e.g. Bandwidth Barn “Velocity Programme”

• Or as a “connected classroom” e.g. Oscar Mpetha High School

• Target of 50 phone sales per month and 10 PC/laptops Gross margin of 30%

• Field sales person/s employed

• SKYPE, GOOGLE, British Consulate sponsorship

LAGUNYA Team

• Sonwabile Phango • Manager - Cash collection

and book keeping, maintenance, security)

• Tamara Zitha Assistant Manager - 4 day week running the shop.

• Sthembiso IT Manager -and runs the shop 2 days a week.

The mission – the long term goal?

• To create a self sustaining business in the Lagunya local catchment area.

• To see the Manager’s of each business acquire and prosper from an equity stake in their IBC.

• To replicate this model across the Western Cape and ultimately, nationally.

• For LAGUNYA to be a recognised national brand.

• To retire to Zanzibar and write a book about my experiences by decades end!!

Bibliography

• House of Stone - Christina Lamb

• Umlungu in the Township – Steven Otter

• How Britain Made the Modern World - Niall Ferguson

• Heart of Darkness - Joseph Conrad

• Long Walk to Freedom - Nelson Mandela

• Diamonds, Gold and War – Martin Meredith

• The World is Flat - Thomas L Friedman

• The Fortune at the Bottom of the Pyramid – C K Prahalad

Many thanks and questions!

Justin Farnell

justin@farnellwireless.co.za

Mobile: 082 936 6003

www.lagunya.co.za