Travelling at light speed along dark fibres of success
06 August 2012
KHUDUSELA Pitje opted to become an entrepreneur in true Hollywood style - while relaxing at Cuba's renowned Guardalavaca resort. Today, his investment portfolio underpins the future of Africa's broadband infrastructure.
Picture taken by TYRONE ARTHUR
Now 34, the son of a township cinema operator and former mayor of Mamelodi is emerging as a pacesetter for our telecommunications industry.
A chartered accountant by profession and a trained investment banker at JPMorgan in Europe and SA, Pitje was on the teams negotiating the Iscor rights issue and Telkom listing long before he took that fateful Caribbean getaway.
With his future in investment banking assured, he chose instead in 2004 to fund his own business start-up with a series of small, low-profile financing deals.
"I was 29 with a dream of building a telecoms business," says Pitje. "The first investment company I built was New Heights, with a friend I'd known at high school. Oddly enough, our first deal was with an environmental risk management company, Shangoni; we didn't get paid much but had equity in the business. It was a valuable early relationship which is beginning to pay off handsomely."
One link especially, with a group of Australians looking for a coal farm in Limpopo, began with a 6% equity stake. Pitje has just reversed that into almost 2-million Coal of Africa shares through Shangoni Bezwe (which is owned by New Heights).
Meanwhile, his telecoms masterplan, empowered by good business intelligence and shrewd financing, has established Dark Fibre Africa (DFA) as the first neutral-shared infrastructure, offering immense capacity to the scores of licensed broadcasters, telecoms operators and internet service providers.
Young entrepreneur in a hurry doesn't begin to describe this guy. After matriculating from StAndrews in Grahamstown in 1993 he studied through Unisa for his BCom in accounting, and his Certificate in the Theory of Accounting in 1999. During that time he worked in all of the business units at Lindsay Saker, as an audit clerk at Kessel Feinstein, and assisting the treasury manager with cash-flow analysis at McDonald's head office in Woodmead.
"My dad's business model was 100% grassroots," he says. "I realised that my future lay in the financing side. My favourite subject as a teenager was accounting, and I set my sights on becoming a CA."
At PricewaterhouseCoopers he passed his board papers at his first attempt while supervising audits at Nike SA, Otis Elevators, Wits and African Cables, among others.
Joining JPMorgan in 2000, he was soon seconded to London, working in the public sector and core merger and acquisition groups, especially in the telecoms sector. After a training spell in the New York office he went to Europe, where the telecoms market was flourishing through fibreoptic networks carrying high-speed data.
Transferred in 2003 back to JPMorgan in Johannesburg, Pitje's decision to strike out on his own took on an added resonance. He'd met his future wife, and on holiday together on Cuba's riviera they charted their life together from more than just the business angle.
No matter how steep his trajectory, Pitje plans in five-year cycles, ticking off each marker as he goes. This month, it's five years since New Heights began investing in small businesses in key sectors of the technology business: broadcast, multimedia and surveillance.
Towards the end of 2006 - before the global economic downturn - he formed New GX Capital in partnership with Absa Capital. Very soon the company acquired a 37,3% stake in Community Investment Ventures Holding (CIV), which became his base for launching the innovative DFA project.
"We realised from the start that 'dark fibre' (the industry term for unlit capacity, which is available for leasing) is a capital-intensive exercise," he says. "Our advantage in the market is in laying cable faster nationwide than the competition and restoring the environment quickly to its original condition as we go. This level of technical expertise is expensive."
So Venfin, a large financial sponsor well versed in the technology sector, and Absa's infrastructure fund added their support to a commitment of laying R2bn worth of shared ducting infrastructure. DFA has no precedent in our telecoms industry; there is no legislation for an open-access cable operation leasing space to its clients. Pitje therefore has spent the past two years wading forward through red tape - from government to communications watchdog Icasa, and from municipalities to conservation groups.
"Logically, DFA will play a major role in our country's development," he smiles. "We are environmentally friendly, and politically and commercially an asset. We have it all going for us; it's just getting the go-ahead at every level and proving what we can do by doing it."
Therefore, when the Seacom undersea cable landed at Mtunzini on the Zululand coast last month, DFA was there to hook up the first commercial fibre route to SA's nonprofit Tertiary Education and Research Network (Tenet).
So confident is Pitje in the venture, in fact, that he's just concluded the deal that triggers his next five-year plan - buying out his partner in New GX and refinancing his stake in CIV through the Pan-African Infrastructure Development Fund (PAIDF).
"The refinancing has gone to the Competition Commission," he says. "I'm confident, however, that the PAIDF is the best funder for CIV going forward, with our shared agenda of development throughout Africa."
Even the economy is helping DFA dominate its market. "If there is a good thing about the recession we're in," he notes, "it's that anyone now trying to find the capital we raised to start this exercise would struggle. We are two years ahead of any potential competitor in the dark fibre market. The CIV companies had the skills in technology and engineering on hand to launch the operation as soon as we had the capex in place."
Family is also integral to Pitje's planning. At 31, his wife Nonkululeko is a rising executive with Discovery Health. Their daughter is nine months old and they want to invest in the levels of education that fuelled their own career breaks. DFA's facilitation in the Tenet network has kicked off Pitje's own educational foundation.
"What drives my foundation is that my dad ran a small community fund back in the day, which helped students with bursaries," he says. "I'm taking over from that, mainly targeting schools in Soshanguve. The school where I spent my early years will be the first beneficiary. I will contribute my own money and then go to the CIV companies; what we'll fund are libraries, computer centres and sports facilities."
DFA has proved it's possible to get infrastructure capable of moving data at a rate of a full DVD every four seconds; his ideas about effective mass education are equally cutting-edge.
The reason private schools are so effective is their quality teaching and sports facilities, he believes, supported by the wide access students have to information. In his plan, school labs can be pooled on interactive networks to serve several campuses at once. In sport, retired soccer greats could coach kids from several schools at one central sports centre.
It's think-tank material, and unsurprisingly he's in demand nowadays at some of these business group discussions. "I enjoy them," he says, "although it's challenging to put one's own ideas on the table among formidable business intellects."
Apart from the stimulation of brainstorming with the best and brightest, Pitje sees these dinner- table debates as part of investment in his business. The more work you put into preparing for high-level discussions, the more useful they become to orientate your strategic planning.
Perhaps also unsurprisingly, Pitje 's in the final of Ernst & Young's South African chapter of the World Entrepreneur Awards 2009, in the emerging entrepreneur category.
"Hopefully one makes it to the short list, and then the real benefit of the process will become apparent," he said before the finalists were announced.
Such benefits, he hopes, will empower his next five-year business plan. It's centred on repositioning New GX as a business brand.
It is also the black economic empowerment partner in the Bravo group, he explains, which is a furniture and bedding company with a strong management team and established brands including Sealy, Edblo, Slumberland, Grafton Everest and Gomma Gomma. "So as soon as the consumer market returns to full health we are in a very good business."
The only setback that Pitje is experiencing lately, in fact, is in the area that frustrates many business dynamos - the golf course. In his case, though, he can't even get membership to the club he wants to join.
"It's driving me mad," he confesses. "I'm a fitness addict; I run at least 25km a week and go to gym. Now I want to get into golf; apparently it's a world of networking I haven't tried yet. But the process of getting into a golf club is based on a tradition from long before I was born. I might need a separate five-year plan just to get membership."
We have it all going for us - it's just getting the go-ahead at every level and proving what we can do by doing it.